Alright! Yesterday I finished the scene for the final boss in level 2 - I'm quite pleased cos the cutscene came out just like I wanted it. This means that all that's left is modifying another two chunks with a few puzzles here and there and level 2 will be ready to go.
I had to give up two ideas for this level because they are probably not really supported in TorchED, and at my current skill level, trying to come up with a way of doing this would have been too time demanding. Basically the possibility of creating an NPC which would shift its alignment according to the storyline as set by the Logic group. The other idea was making the dog die, but there are currently no animations for this and making the dog disappear in a flash of particles looked kinda weird and often the dog and the particles just disappeared and that's it.
I have already invested a lot of time in trying to make these two scenarios work out but to no avail, so I had to come up with a workaround, decent nonetheless.
Level 3 was ready a while ago, what it needs is a bit of polishing but that can go too.
I'm very excited about level 4 because it will present a change of scene and a light twist in the storyline.