Could Hurt be a pre-Doctor that was also
in the Time-War? The Timelords resurrected Rassilon, they might also have let him cross his own timeline in hopes of winning the war.
Or he's The Other after all. Or an aged version of #8 as was suggested, who lived a looooong time before regenerating into #9.
I agree this episode would have been better as a two-parter. More crossover/past Doctor scenes would have been nice.
"Steal this one. The navigation system's knackered, but you'll have more fun." Great line.