Really twists like this are what makes Dukat the best villain in Trek. He's multi-layered for sure and doesn't fit the cookie cutter villain of the week cliche by any means. If you asked him, he's the hero of his own story. He's the guy who just honestly doesn't get why people don't want to be ruled by his benevolent hand. When he was working with the good guys in seasons 4-5, it wasn't out of a path to redemption more than it was just in his self-interest. So when he sees an oppurtunity to grab power again, and destroy his enemies, it's only natural he grabs at it. This will have lasting consequences the rest of the series.
The UBC(I like the acronym) was certainly a shock, but in the end poorly used. DS9 certainly did have the same flaw as many week to week shows that the plot often doesn't have an overall direction regarding specifics like this. But the show is willing to take chances, rock the boat and not willing to settle for the status quo. So I'm usually more forgiving towards DS9's plot holes than I am say Voyager's.
The system destroying bomb, I dunno... I think it was made of the same stuff that the terrorist in that season 1 episode used to try and blow up the wormhole. It was implied the stuff was rare and hard to get. So I'd hope that's just the case. It was a climatic moment when you're expecting the Cardassian and Jem'Hadar fleets to arrive only to have the whole thing be a trap though.
The escape... was very convienent. Bashir will even get called on this in a future episode when his loyalty is in question. I dunno, I would have found it more convincing if they snuck out through the walls and stole a Jem'Hadar ship in a firefight or something than the comm relay transport to our runabout which is still very convienently in orbit thing. It still would have had holes either way, and there was no one else to rescue them. But as I said, DS9 tries and isn't afraid to shake things up, so you can forgive plot holes now and again.
It was a good episode and a promise of things to come with Dukat's poorly veiled threat at the end. I did like how it was even "You foiled my plot... but I'll get you next time Gadge-- I mean Sisko! Next time!" Now only if they just had a Cardassian cat for Dukat to be maliciously petting when he said that. :P