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Ironworks: I'm not convinced they are different species. The size and shape are very different, yes, but the hand (give or take a mass of scar tissue) and the eye, which are all you really see of the old man, aren't so different. The old man was
burned in the wars, apparently--in addition to being old and shrunken and scarred, he may have lost most of his blubber and that's why he isn't all orca-style wide and round.
The situation is getting extreme, but my best guess is still test/setup: The old man is the real duke, the big younger guy is acting like an asshole to test Saliphie and to some extent the king, and this (fake) death threat is the final test of her heart and resolve, which she has just passed with flying colours. If anything this "kill the old man" schtick convinces me more strongly that he's really the duke: If the young one is the duke, just up and deciding to kill some aged relative in his entourage because he's not dancing badly enough seems way more stupid caricature evil than any character in this manga has been. It's just too senseless an action. Has to be an act to see what Saliphie will do.
One amusing wrinkle is, if the old man is the real duke, then while it
seems as if Galoa is insulting Saliphie by making her dance with some old man, in reality they arranged for her to dance with the real duke, properly meeting protocol, where making her dance with a fake would have been an insult.