First of all, would like to congratulate you on the work you have done with the game so far! I have quite enjoyed it and am looking forwards to see how it would develop!
Thinking about the idea of villains, one of the thoughts that came to me is that in many modern stories and traditional mythologies the heroes and the villains came from the same stuff, so to speak, and many of the villains we like actually started out as decent heroes in one form or another.
Perhaps having a system where one or some of your heroes could be recast as the villains of your own story and mythos could help not only help secure a more cohesive overarching story plot, but also help create a personal relationship between both the player characters and the villains and also between the players and the villains themselves.
Conditions for generating such villains could be things like character death, or failing certain hero-character related chapter goals. Perhaps this is not the road you wish to take, as this may be too close to the concept of procedurally generated villains that encourage players to do weird things in their playthroughs to generate them, but maybe a mixture of bespoke villains and turned heores could work out as a mix?
Whichever direction you choose to go in, looking forwards to see where it takes you!