Actually, you're not supposed to hurt them *too* much in the first battle. You beat on either Isair or Madae until Isair decides they should pop out to the pool room. You clean up any enemies left in the throne room. Then you walk out the door and automatically end up in the pool room.
Fighting starts again, but then Orrick should pop into the room with some news, signalling the end of the game.
However, I found in my games that if the twin of choice was hurt too much in the first encounter, Orrick never did his thing. And there is no way you can kill the twins. They will always be no worse than "almost dead".
Nightowl2
P.S. In case you didn't know it, you can rest on top of the tower after you kill the half-dragons and company.
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