Episode 12 begins in a undisclosed location where Cross Ange's answer to Evangelion's SEELE is meeting and going over the battle footage from Sala's appearance, and Julio is dismissing questions about something called the Dawn Pillar activating, but everyone else thinks that's bullshit and wants to reinforce Arzenal (apparently the tip of the spear of the DRAGON counter-offense), then another guy points out they can't do that and brings up the Vilkiss, which everyone thought had been destroyed (explains the flashback scene with Jill piloting it at one point and why it was stuck in storage for so long), and Julio starts getting shit on for his apparent failure to keep an eye on Arzenal (which falls under his purview), and the fact Misty got kidnapped and the Misurugi family screwed the pooch preventing that is used as a goad that who is apparently Misty's father is rather pissed by.
Julio then makes it official Ange is an unperson once again by referring to Ange as a thing (when his sister gets the blame for Misty's abduction, which, as you will recall, he partially engineered to trap Ange). The token woman at the proceedings then tells everyone to get back to business (i.e. - how are we protecting the world again?), and when it's mentioned the Norma can't be relied upon to be humanity's shield (thanks to events mentioned previously), that's when that blonde guy who was behind a tree reading since the intro gets up, and calls everyone hopeless. His name is Embryo (gee, that sounds like something from obviousvillainnames.txt), and apparently everyone else there defers to him.
Cue opening credits.
Once we get back to the meeting, Embryo brings up their options: surrender (like hell they are doing that) or kill all DRAGONs off, which is unthinkable,because it will interfere with option three: rebuild the world (Instrumentality, in my Gundam referencing dragon killing mecha series?), and the way he describes it, you'd seriously think this guy was channeling Keel Lorenz, albeit less on the quasi-benevolent side (as in, there is no benefit to everyone hidden in this forced evolutionary reset like there was in Evangelion, depending on your POV) and more on the purge everyone we don't give a shit about when we wipe the slate clean (damn, how Nazi-ish can they get with their Instrumentality plan?).
Of course, Julio gets in touch with his inner Hitler and just loves option three, and while everyone else is kinda reluctant to throw the baby out with the bathwater (as in, all the progress they achieved with a Mana based society with a slave class covering their ass), they all concede it may be the only choice, and as Embryo hands Julio the car keys to Instrumentality, the meeting ends (it was set in some fancy holographic meeting room area) , and as Riza's like "so, how'd it go?", Julio and her leave, and we see what looks like a recording device was under Julio's desk.and Tusk is apparently not thrilled with what he heard.
We then cut back to Arzenal, where there are so many DRAGON corpses Jasmine is having to use a bulldozer to put them all into a mass grave. Meanwhile, everyone else is picking up the frankly jacked up remnants of the base. Maggy tries to check on a shaken Emma in the infirmary (apparently, her first real experience with combat gave her epic PTSD), who is not in the mood for anyone to get near her. Meanwhile, Jill has gathered together all the surviving senior cast members and is asking who has command experience.
Hilda quietly raises her hand, and Jill signs off on it, with Ersha and Vivian as her lieutenants. Rosalie and Chris are understandably shocked at Hilda (a deserter) getting the job, and Jill points out it's temporary and Salia's out because she's in detention for defying orders. Hilda then tells Rosalie to do the job if she wants it that much, and Rosalie backs away from the thrown gauntlet. That settled, Jill tells everyone to be on combat alert. As they all salute and leave, Jill lights up a cig, reads over the report Tusk sent, and doesn't look happy.
Ange then speaks up behind her and points out her detention is over, and she wants Jill to honor her promise from the previous episode. Jill tries to use the "we've got a lot of shit to do" excuse, but Ange is like "I saved everyone's ass, you kinda owe me". Jill concedes the point, but tells Ange to leave Momoka out of the conversation. Meanwhile, Hilda wants to know where Ange is going, while Ersha wonders where Vivian is. Cut to Vivian and Salia's room where Vivian falls out of bed.
We then cut to the bath where Ange is like "why are we discussing this here?", and Jill claims "secrets should be shared when completely exposed", and Ange is like "fine, but I want to know the answers to question the whole audience has had since day one".
Jill begins with the story of the world's creation, and just as Ange is like "are you trolling me", Jill continues, and apparently, that Instrumentality plan the SEELE ripoffs were discussing has happened before, and Mana and the benefits it brought were one of the side benefits of the last time. However, it seems some female children were discovered to be Norma (genetic leftovers from before the world was reborn, which kinda explains the prejudice, given these former humans fucked everything up in the backstory), and because humanity was like "why the hell do we still have leftovers of when humanity was a (literal) goddamned disgrace around, Norma were shit on merely for being remnants of a time everyone wanted to never return. Apparently, whoever the hell was behind this (all evidence points to this Embryo guy) encouraged this racist horseshit, and it was used to keep humanity united against a common enemy, which, while that strikes me as a cynical plan, seems to have been effective as cover for the fact "God" let this happen on purpose, feeding everyone a line of crap about how Normas had to be dealt with to prevent the Bad Times from returning.
In short, Normas exist because God fucked up remaking the world from last time, left some people in the human genome who didn't fit in with the reborn humanity, so he used the Norma as scapegoats as a compensatory way of maintaining stability and to cover his own incompetence.
God sounds like an asshole IMO.
Ange is in "......" mode, and when Jill asks about it, Ange is having a hard time swallowing all that, and Jill drops a drama bomb: she heard it from God himself. Anyway, Ange files that away as Jill continues.
And so, with the exception of the occasional Norma, humanity was good, until a bunch of remnants of the old humans decided they were tired of being shit on and went to war with the Mana users, and in the process, captured one of God's own superweapons: Ragna-mail, the prototype of all Para-mail.
AKA - The Vilkiss.
However, God was smart enough to seal it from being used by just anybody, and as they discovered a little too late this information, they did discover where all the other Norma were sent off:
To fight DRAGONs and shield all Mana users from having to deal with them.
Anyway, they made contact with Arzenal (when Jasmine was running things), handed over the Vilkiss, and basically prepared for the day they would overthrow their oppressors (a key part of this was finding out how to make the Vilkiss work right).
Jill enters the picture at this point, and we discover she was basically just like Ange, circumstances and all (royalty, born Norma, lost everything, etc). In fact, she used to be named Alektra Maria von Loewenherz.
Before I resume, this is clearing up quite a lot, except for how the DRAGONs fit into all this, but yeah, why am I not surprised the Norma are just innocents blamed for something they had nothing to do with because God is literally a bastard?
Ange heard of her, and the official story is that she fell ill and died when she was ten (of course, propaganda, to cover up the fact she was born a Norma), and we discover she was the first one to get the Vilkiss to work right (due to being born of the same bloodline God had entrusted the Vilkiss too, and her royal ring was a further unlock code for the Vikiss' true potential, just like Ange. We also find out Jill was all for helping out with Libertus, the plan by the Norma/Ancient People to screw over their oppressors, which also explains Tusk (his father was one of the latter). Jill also reveals she is just as pissed off as Ange is now, but during a flight gone horribly wrong, she lost her ring, right arm, her friends, and a massive chunk of her self esteem.
And that's where Ange enters the picture, and we discover Jill knew all along Ange was basically Herself 2.0 and Jill basically tells Ange to take up her sword being the spearhead of Libertus. Ange gets confirmation Jill was basically planning for Ange to fill her shoes since day one (explains her Stealth Mentoring quite a bit), and she thanks Jill for opening her eyes, but tell Jill "No" to being her successor, citing shes not opposed to the idea, but she doesn't want to be forced into it (Jill understands and accepts that), then asks the big question:
Where do the DRAGONs fit in with the story?
We then cut away as Emma is wandering the halls, trying to patch in to HQ via Mana comm, and as she does so, Vivian (sounds like a big plodding giant, face hid from view at this point) runs into her, Emma metaphorically shits herself and passes out, and Vivian looks down at some glass shards on the ground and discovers a massive WTF:
She's now a Scuna class DRAGON.
Some Norma discover her, they freak (as does she), and the whole base springs into action as Jill and Ange's talk gets cut short. Meanwhile, teams are being brought down to hunt down the DRAGON survivor, and as Hilda is barking orders, they realize Vivian isn't around, but table that as they decide hunting down the DRAGON is more important. Ange shows up, gets chided for being late and tossed a gun, and Ersha gets orders to let Salia out to join the DRAGON hunt.
Meanwhile, Jill heads to the infirmary, passes Maggy, and tells her to get a ton of inhibitor ready.
We cut back to DRAGON!Vivian, who is in the mess hall, hungry, and as she discovers she can't eat the same with claws (even though the curry smells really good), that's when Salia and Ersha show up, don't recognize her, and open fire, forcing Vivian to evade. Vivian makes it outside, realizes what's going on, files around Arzenal all emo, and as Ange is about to open fire, she realizes the DRAGON is making the sounds of her mother's song, so she decides to sing along. It's working, and as it starts dawning on Ange who the DRAGON might be, Hilda, Chris and Rosalie show up, and Ange fires a warning shot at them so she can continue, to their WTF reaction.
Jill shows up to stop Ersha and Salia from joining in, and Ange reaches out to DRAGON, who transforms back into Vivian (with her doing another 'Quiz time!" line), and everyone else is all 0_0. Maggy gives Vivian a knockout shot not long after Ange welcomes Vivian back to humanity (with some sun flare censoring preserving Vivian's modesty), and as Maggy takes Vivian away, Ange has WTF lightbulb moment as she realizes what the DRAGON's really are.
At that moment, Jasmine finishes up piling all the DRAGON corpses in the hole, throws gas on them, then as she lights it up, Ange and the others show up to watch and stare in horror as the corpses turn human shaped in the flames.
And that's when Jill shows up and drops the drama bomb to the rest:
"You know how the story goes. The monster was human all along."
In short, the DRAGON's are basically to Cross Ange what the Mu were in RahXephon.
Ange is more than a little sickened as she realized what she's been killing the whole time, flashbacking in revulsion to her blood rage in the Tusk debut episode, and that's when Jill throws back Ange's line about enjoying her current life back in her face. This pisses Ange off epically, and as Ange is like 'fuck helping with Libertus", Jill is like "fine, then be the bitch of the sadistic God who created us, your choice". As Jill walks off, Embryo shows up right in front of her, sarcastically mentions he never referred to himself as God (confirming he is the series Big Bad). Jill shoots him (it's a hologram), and that's when he points out the flashing bulletin in the background about how the Norma are being thanked for their service and are going to be evacuated from Arzenal.
We don't even need Julio showing up (but he does anyway) to confirm this is, in yet another Nazi parallel, the beginning of the Final Solution to the Norma Problem.
Cue end credits.
Next episode preview has the Norma obviously fighting this extermination plan, more combat, and what looks like Embyro deploying in the Evil Twin of and a Shinkiro (from Code Geass) inspired Paramail counterpart to the Vilkiss, and Vivan and Ange having an amusing conversation about how Vivian needs to pay Ange royalties for singing her song.
P.S. - This episode finally does admit, in a roundabout way, why there is so much lesbian cheesecake: Basically, all the Norma are the Humanity 1.0 aberrations in a Humanity 2.0 world, and since only women have a chance to be born this way, it practically guarantees, given how things turned out, there would be a lot of woman-woman scenes.
That strikes me as epically tacky.