A lot of people say Dukat was a great character until he became one-dimensional.
From my perspective, he was a complex character from beginning to end who had the most dramatic arc of all. He started as a guy who was in love with himself, confident in his choices and felt just fine in his own skin. At least that's how it appeared. As the series progressed, he became a man who had lost power, lost any respect he had from his fellow Cardassians, and didn't get any "thanks" from the Bajoran people for his (in his view) kinder and gentler leadership during the occupation (I think he actually expected the Bajorans to be thankful in retrospect). Things slowly fell apart for him, and then his daughter's death drove him to madness. He never escaped his madness. Toward the end, he was truly a madman who still longed for power, still loved himself and still sought the admiration of the Bajoran people. This led him to the pah wraith cult, which gave him the power he desired, and for a time the admiration of a select few Bajorans. And then there was Sisko, who still had the office Dukat once proudly occupied. Dukat actually respected Sisko, but he did not get Sisko's respect in return, and I believe that's why he hated him so much. The writers managed to keep me sympathetic toward Gul Dukat for most of the series, even though I was often disappointed in his choices. At the very end, he was a power-hungry madman who had finally been abandoned by everyone he knew, he had no hope of gaining anyone's admiration and he knew it, and was being controlled by creatures who were equally mad = a scary combination. Yes, madmen are often one-dimensional in their actions. But the series showed us this man's very complex, very deep path to madness. The arc itself was fascinating, scary and at times uncomfortable to watch. Nothing simple about it. A great character all the way through if you ask me.
This, Dukat went on a journey no other villain went on before. For me the character's peak was Waltz, were at last Dukat comes out of his delusion and admits what we all knew and suspected beforehand.
Dukat went from one nasty conniving man whom you crossed at your own peril, to eventually (right at the end) pure evil. I say pure evil because I think it's highly symbolic that the Pah Wraiths removed Dukat's disguise revealing his true form. It's a point where Dukat can't even disguise, in any possible way, his evil any more (something which happened to Sauron in Lord of the Rings) and his journey is finally complete.
I guess the religious and Biblical connotations freaked out many people and that's why they had to bash season 7 Dukat, but being spiritual myself I thought it was a great move where this character went.
The best part of this character arc is how Dukat threw away his ocassional chances of redemption, like the alcoholic who just can't keep away from the bottle, and more than anything else it was almost depressing. I say almost because Dukat deserved almost everything that afflicted him, save the death of his daughter. Ziyal was possibly Dukat's last chance for repentance.