Well, that was definitely something I anticipated and that being the knight was Takeru's old body...it really did make the most sense if there was to be a reveal.
Having said that, the whole other Takeru being in his old body in that world also makes sense since there was only one soul seen when Takeru went to the maiden girl.
For the demon lord showing the scene right after the hero's death, I would imagine that there was some level of trickery there to make Takeru and Karen believe what the demon lord anted them to believe. This still does not explain a thing about Edelweiss, but we will hopefully find out something soon as she will most certainly be important. My guess: she died and is now the blonde adventurer Takeru met, she just doesn't seem to remember anything...yet. I feel like Edelweiss would have tried to stop the demon lord from taking Takeru's body and because we haven't seen much on the front of Edelweiss she is either dead and now the blonde adventurer or the demon lord.