Much of this episode falls under the category of retroactive continuity. Considering the fact that Davis was said to have come to Earth at the same time as Clark in the meteor shower in "Bloodline", inserting his story into the original start for the series was practically a given. It was relatively well done, even if it was shoe-horned into the established continuity.
I've always liked the Veritas explanation for Lionel's obsession with Clark, and this episode also does a good job of setting up Davis as Clark's true adversary. The only thing that doesn't quite match is the new interpretation of the Naman/Sageeth story. For one thing, Sageeth was supposed to be a friend of Naman, almost like a brother. David is known to Clark, but I wouldn't say that they were ever really friends. And the while business with the Starblade in "Talisman" made it clear that Sageeth was supposed to be either Lionel or Lex.
And as much as the Veritas backstory worked in the previous season, that was only because Lionel never quite knew whether or not Clark was the Traveler. Having him work with others to find the Traveler gives Lionel a basis for everything he does in the early seasons. Changing that, so that Lionel always knew that Clark was the Traveler, undermines the logical rationale for Lionel's actions. It just doesn't add up.
It also seems a bit convenient that Tess would find the Veritas book and get caught up on that side of the Luthor mythos so quickly. This has always been a bit of a problem for the writers. Tess was brought in to carry on what Lex might have done had Michael Rosenbaum remaining on the show. While the writers have tried very hard to give her a unique character thread, she's often tossed into situations where she has to act like Lex or Lionel, depending on the perceived need. It's one reason why her character has slowly but surely been losing definition.
Despite the larger problems caused by the retconning, the story worked on its own merits. Davis has been focusing on Chloe for a long time as something of an emotional anchor, so his decision to ask her to help him die makes sense. Chloe's character motivations are a little less obvious. Once Clark discovers the truth about Davis, particularly that Jimmy was right about him all along, why would she still choose to stand by Davis' side? Especially once it's clear that he's a massive threat and practically unstoppable? The only explanation is that she is willing to sacrifice her own interests to keep him in check. Then again, now that she's Watchtower, why not explain the problem to her team?
The writers seem to be building to the "death of Superman" story, but that wouldn't quite work given the differences between the comics and "Smallville". It might be more interesting if Oliver's presence and Chloe's inclusion with the Justice League brought them into the fray. If the writers also paid off the episodes from earlier in the season, where Tess was apparently pulling together a team of her own, it would be impressive. For now, I'm cautiously optimistic that the writers can pull it all together over the next four episodes.