I suppose I always saw ch 3 as a setup rather than a climax. This may have a great deal with not particularly feeling for Dierdre or Elto.

You're right in that merely shortening gen 2 wouldn't necessarily help the lack of connection with gen 2 characters. How about this: have the kids be older by the time of the Barhara Massacre, but have them conduct a playable side mission under the direction of Shannan while their parents march on Velthomer. This both sows investment earlier and makes them more deeply connected to the momentum of pt 1. It also starts their storyline earlier so it doesn't feel like merely shortening their screentime.