I did not come up with this theory. Just figured it'd be nice to have a thread to discuss it, rather than the Chi walkthrough thread.
tl;dr: The Goatblade isn't actually the Goatblade. End of Pain is the true Goatblade, the weapon of the 6th apprentice. The Master of Masters is the lion, has some sort of nefarious plot, and decides to remove the 6th from the equation entirely in order to escalate the tension and distrust between the others. It ends with the 6th's possession by the MoM, causing the MoM's Keyblade to take on the appearance of a lion-goat hybrid of the Goatblade we all know and love. It'd also explain why the Goatblade happens to be the most ancient of all manmade Keyblades.Wait a sec....Goat now I know what has been eating at me! There was one more keyblade that was like the foretellers besides Xehanort that I was remembering. A keyblade that has a goat as its animal that you got in DDD and its design made no sense to the context of anything as all you do is kill a bunch of nightmares to get it.
Here is a theory then.
The traitor isn't a bad person, in fact they are the opposite. They are the 6th apprentice and because they never had a book of prophecy they never went crazy like the foretellers did. So in the end they are the one to betray the Foretellers but they don't betray them for evil, rather instead for good. They see the Foretellers going crazy over light, over the Lux, and so what do they do? They try to end all the pain this is causing by creating a counter force.
How do you stop light? Consume it with darkness and so how do you stop a bunch of crazed wielders of light? You counter them with beings of darkness. How do you stop the fighting over Lux? By harvesting it before the other unions can and by stealing it/asking it from them. As Nightmare Chirithy said the Lux is the source of all the fighting and pain, that we should give it to them instead. In short while the Foretellers are being consumed by their own selfish goals all the 6th apprentice wants to do is "End the Pain". And this keyblade is a teaser to that, that the apprentice that represented Lust wanted to use the darkness to end the pain of everyone. But ironically this means they would be the one who lusts after the Lux the most in desperation to stop the fighting.
And who would seemingly side with them? Who would encourage them down this path? Why none other than the Master of Masters that apparently had "disappeared". On surface he can say he wants to end the pain he's caused his foretellers and the people of the world. So he and his 6th apprentice team up and play on the forces of darkness to do so. But it's a trick of the Master of Masters he's lead the 6th down a path of darkness. In desperation to save his fellow apprentices and everyone else in the world his heart dives deeper and deeper into darkness until the Master of Masters can steal possession of his heart and turn him into his vessel. Thus what Xehanort's keyblade is, it's the keyblade of Master+Apprentice fusion. And all this is exactly what the Master of Master wants because by encourage the forces of light to turn on one another and then throwing in a force of darkness into the mix he gets his clash of light vs darkness that begets the X-blade.
The 6th was never a bad person they just wanted to end everyone's pain. Which is to say they are Sora's equivalent, the Master is Xehanort's equivalent, and Sora's equivalent was the first vessel of darkness. And that the entire story as a whole Sora vs Xehanort is a reflection of the conflict between this Master and Apprentice. It doesn't need to be literal, they don't need to be like reincarnations but more like spiritual successors.
Also I really feel like the evidence is stacking up for the Master of Masters being evil. If the keyblade was created out covet for the X-blade and he is the first keyblader then that confirms that Master of Masters wants the X-blade. No one seems to be aware of the X-blade either and you know what else the Master of Masters seemingly made? Chirithy. You know what I think? The Master of Masters with his eye of the future saw into the future, he saw the forging the X-blade, he saw what it was capable of, and he wanted it. He tries to make his own and just gets keyblades so what does he do? He decides to cheat, before he creates the book of prophecies he uses his powers to summon forth the things he saw in his visions and bring in some copies of the X-blade components into his world, people he knows he can manipulate.
Terra, Aqua, Ventus, Riku, Kairi, and Sora all with natures that are easy to manipulate. Then he hides their identities so that no one will be able to know who they are. Because he can see into the future he can see what his would-be apprentices will do, the different plans they will come up with. Like Ava who in her desire to preserve the keyblade would hoard away wielders and so he named her after the sin of greed, Avarice. Each apprentice would have a role to play in his plan and their name would represent their purpose. But he wasn't done yet then he created the book of prophecies that contained both his visions and his powers. This would be a necessary step because part of cheating and making things happen ahead of schedule was the need for heartless, lux, and worlds/people who wouldn't exist for hundreds of years. Of course he intentionally removed a page, the page about the truth of the traitor making the foretellers suspicious of one another and thus setting the path for them to fight.
Meanwhile he intentionally didn't give the 6th, the Sora, a book to create a divide between him and them. Sora like always would be kept in the dark like always while his friends around him know everything. And this would lead to playing on Sora's care for his friends as he's forced to watch them turn against one another fighting over things he doesn't have a comprehension of. Desperate to stop them he would see his only choice of action is prevent them from fighting by harvesting all the lux before them. Ultimately he is taken over, Master of Masters gets his war which forges his X-blade, kingdom hearts appears, and then everything goes terrible. Upon seeing Kingdom Hearts people become greedy for it and its counterpart the X-blade. A war for the X-blade begins and in the end the master of masters plan fails as his X-blade breaks and the world is destroyed. The Master of Masters, the foretellers, and the wielders they are all no more the only thing left behind is his keyblade.
Time marches onward and everything the Master of Masters (I wonder if it's a coincidence that's MoM like Mark of Mastery) brought forth in the past is born naturally. The princesses, their worlds, the guardians of light, and now Xehanort is born and is following the Master of Masters's footsteps. He inherits his keyblade and becomes the spiritual successor who causes the true keyblade war that will destroy the world. Meanwhile this time around Sora, Riku, Kairi, Terra, Aqua, and Ventus won't be on opposing sides they'll be on a unified front. And Sora won't be a vessel on the side of darkness he's leading the charge on the side of light.