If this story arc happens over and over, and players in it are almost literally reincarnated, giving up their conscious minds and memories to repeat their roles in it over thousands of years, and there are "gods" pulling the strings, then what the heck is the point to all this?

Let's create a race that creates a race that almost exterminates the first race and then they learn something important that they forget so we can do it all over again and this is fun because ...?

Or are all these hybrid cylons the actual Lords of Kobol themselves, and they're participating in this story arc over and over to get something right they keep getting wrong?

Not to pee on anything (the show itself in fact is my Cylon god), but I hope they aren't getting too Matrix on us--where nothing makes sense, where giant arcs are created to patch giant plot holes created because something was cool to do just for its own sake early in a series that is suddenly successful and then later on they have to play on it and expand it and make it make sense. Fortunately, the mysticism has spiced the show instead of taking it over, at least until the finale of Season 3; we'll just have to see what happens in 4.