The key to the twist ending is that Princess Emeraude is the Pillar supporting the world of Cephiro with her prayers.
Emeraude, due to her strength of will and position, is only one step short of being the goddess of Cephiro.
This has side effects: she cannot be killed by anyone from Cephiro, she cannot commit suicide, and she cannot abdicate. 
Should the Pillar be unable to discharge her duties properly this is a recipe for disaster. Say, for example, if the Pillar falls in love with her chief priest Zagato. 
There is, however, an escape clause: the Magic Knights are from another world and are therefore capable of killing the Pillar. Of course the only person who can summon the Magic Knights is the Pillar.
In other words the Magic Knights can be summoned by the Pillar to perform an assisted suicide.
Hikaru, Umi, and Fuu don't find this out until after they have killed Zagato  and an enraged Emeraude is trying to kill them in revenge .
The Magic Knights are also given no choice in the matter: killing Emeraude is the only way under the Pillar System to save both Cephiro and their own lives.
They are also given almost no time to think about it beyond "This sucks". The scene of them moving to the attack with tears streaming from their eyes is heartwrenching.
Don't forget that the Magic Knights are fourteen years old.
Can you say posttraumatic stress disorder? As it happens CLAMP definitely could: this is what the second season is about.
It doesn't help Umi, Hikaru, and Fuu were actively kept in the dark about this.
On a first viewing so are the viewers - the hints as to relationship between Zagato and Emeraude are very subtle but there once you know.
This is why the twist works, but there are implications arising from it.
It is clear that Clef knew this from the beginning and deliberately did not tell them. The Rune-Gods also held back until the last minute. It isn't definite but I think Lafarga knew and didn't tell them. Ferio may have known as well, he certainly knew of the legend.
I've mentioned previously that this changes how I see Clef from a wise mentor to a manipulative bastard.
I may be reading too much into it but I was seeing a subtle commentary on child soldiers this time around. Albeit one that may not be noticed immediately under the pretty shoujo coverings.
As I mentioned in the previous part I still adore this series, but I'm not sure if that is despite the darker elements or because of it.
 Fortunately senility can't be an issue: those of sufficient will in Cephiro can effectively control their age and appearance
 The feeling was mutual.
 Who they thought, and had been repeatedly told, was the villain.
 Having willed her appearance to change from innocent child to Ms Fanservice in the space of a few seconds.