I've always been open to the idea that there's been goings on with Dark Force before PS I. After all, isn't Dark Force just some manifestation of the Supreme Darkness' hatred etc? That's what I've always thought.
As for Medusa, I always thought it was a bit odd that she was there, but your explanation does make sense of her existence. And then there are also the Greek influences as mentioned, but a version of her more like Lassic, a servant of Dark Force. Plus I forgot she was even reborn to start with.
That would also explain why the mirror shield was buried to start with.
So yeah, I'd probably also say Medusa was an older version of Lassic, so to speak, that was killed by Perseus who probably also defeated Dark Force as well. Makes sense really. Though anything else that happens before PS I is open to speculation.
Also, I was surprised when I ran into Darkfalz, albeit much easier to kill, in the edge on my way to kill the Supreme Darkness.