As far as the "being in two places at once" thing goes, it does make sense when we consider Onyxia and Thrall.

It's still weird to me, though, that two different versions of the same person exist at once. With Onyxia, she's in her human form in Stormwind and she drops that guise in her lair, but it's still supposed to be the same person (or dragon) in both places. Yes, the Stormwind version is chronologically prior, but only slightly. With Kael'thas, though, he's a very powerful 25-man raid boss in one instance, and a regular 5-man boss in another. It becomes hard to believe that he's supposed to be the same person existing in the same time period.

It may be true that the Magister's Terrace version is supposed to be chronologically prior to the Tempest Keep version, but this isn't a simple case of "he was over there before, now he's traveled here" like Onyxia and Thrall. The large difference in his strength indicates that a pretty significant amount of time has passed.

Maybe I'm thinking about this too much, but inconsistencies like this bother me.