I get what you're saying about the contradiction of the bad guys saying they'll create the "new humanity". I think you'll find their perspective interesting since Gorgon was referring to herself as Tiamat. But more will become clear in subsequent episodes.
Also, Ushiwakamaru is the childhood name of Minamoto no Yoshitsune, so they are one and the same. And as you read, historically Yoshitsune was male. So other than the obvious gender bent fan service, Ushi's outfit is rationalized in that she lived as a man - a samurai warrior - and had no qualms of her appearance nor cared about if she exposed her skin...much to Fujimaru's chagrin lol
Great reaction! When I first watched this episode, I was totally blown away by the fight scenes. The way it was executed along with a superb soundtrack and sound effects, really drew me in and is easily one of my favorite episodes of anime in general. So I was really looking forward this :)