As is relevent to what The Wanderer said, I like the ideas but I dont really agree with the Kyle settles down scenario. I know he has grown older but he's still reasonably young and in the universe he lives in, fraught with danger, as it is I dont think he would have settled down just yet.
That and I would prefer to pick up as Kyle an "outcast", so to speak, a person people talk of simply as "The Wanderer" perhaps? A nomadic soul, a "Vagabond" of sorts. Peoplke think he's quite "Wilhuf".... wait a sec, that last on doesnt really work. Hmmm perhaps I could turn that into a saying, Man that dude is really Wilhuf... Perhaps not.
Anyway, onto topics of a more relevent nature. Saris is good villian (assuming we say she lived), apart from one thing. She never really stood out, granted she was evil and played with Kyle but she just didnt have the qualities IMHO of a reoccuring villian. Perhaps if she made a surprise and totally unannonced entrance to get revenge, leaving the player going WOW I didnt think I'd see her again, it would be quite satisfing to finish the battle, but as the main evil doer, perhaps its just me but I cant see it. I think it is in Raven's best interest to create a new villian. Not only with this comes surprise, wonder and stary eyed amazement on the behalf of us, the gamer. But also with the appropriate back story, which we dont see just read, and the more pivotal story which we see and are submerged in, it would be quite easy for Raven to bring into being a villian we despise yet is mysterious and original.
As for why Kyle comes out of retirement? Well its quite easy to bring the action to Kyle, as you suggested with the idea about his family. I would prefer it was to happen through other means though. I do like you idea about his child being kidnapped, as other people have speculated about friends/brothers/sister/children getting in trouble all through this post. And in one case someone was brilliant enough to put all these people into one storyline. Any guesses Who? The reason I like this is because to really get the player disliking the villian and really interest them there most likely will have to be some personal issues of some kind, otherwise there is the risk we will feel disconnected and can will not relate to him.
Genius is limited, unfortunately stupidity is not thus so.