Oh how I wish that you all had not beaten me to
noding this story. Xenogears is (in my humble opinion as a
low-level noder)
the single most engrossing story ever related for a game. I will take this oppurtunity to nod to each of the noders above me, they have done a great job of noding this game.
However I can plug a single plot hole that every single noder has missed. It's excusable, but it bridges a gap between Xenogears and Xenosaga.
Each of you have mentioned the inadequacies of disc two. Its understandable. Disc one provided us with fifty hours of enjoyment (and frustration, trudging through the sewers of Kislev) while disc two was what seemed a meager twenty hours of reading. However in order to understand the full scope of why this happened, we must look to the development of the game itself:
Squaresoft began producing Xenogears with large hopes in mind. Obviously for anyone who has ever picked up a copy of Perfect Works can see that they had some big ideas, and for the most part they delivered. Halfway through production however, some higher-up realized that Xenogears would not make enough money to warrant its full development. From my understanding, half of the production staff said something along the lines of "Whatever, lets go make another Final Fantasy game." The other half was distraught about the loss of such a work of art, and this caused a rift within Squaresoft.
Xenogears was not to be even released in the United States originally. It was the dedicated work of Squaresoft's fanboys that brought it over. Square saw that there would be enough demand to bring it over, and after much politicking by the faction wanting to finish it, it was scheduled for a US release in October of 1998.
With Xenogears' completion (though not true completion in the eyes of most,) roughly half of Squaresoft left. They formed a new company, Monolith. For years, (even before the release of the PS2) it was rumored that Monolith would be producing a full remake of every episode outlined within Perfect Works. Monolith produced a few low-budget low-success games, but finally were able to secure Namco to help them produce their ultimate goal: Xenosaga. Currently it is too early in the storyline of Xenosaga to truly know if it is episodic, or if it is simply a complete retelling of the Xenogears' story set on an even grander scale.
So for those of you who enjoy Xenosaga, cease your complaints about the second disc of Xenogears. Without the inadequacies of this disc, we would not have Monolith's current project to be exploring.