Is the sunk cost fallacy always a fallacy?

[Edric O]

Redcloak seems to be confident that he can deal with Xykon at his convenience. Holding a lich's phylactery is one heck of an advantage.

What makes you think he's confident he can deal with Xykon at his convenience? He has contingency measures in place (like holding the phylactery) just in case he needs them, but he seems to be more confident that he won't need them (because he imagines himself to be a master manipulator), than confident that they will work.

He could have used his brother's attack to take out Xykon.
He could have used the duel with Dorukan to initiate an attack on Xykon.
He could have used Roy's destruction of Xykon to eliminate Xykon with no risk at all.
He could have helped the ghost martyrs kill Xykon, or he could have simply stopped Miko from destroying the gate so the GMs could finish the job.

All of those opportunities happened before Gobbotopia was established.

With the exception of the first one, they happened during times when no viable alternative to The Plan - or even a meager substitute for The Plan - was available to Redcloak.