I like your idea Belial. My suspicion is that Tyreal will be the villian in Diablo 3 but i could be way wrong. I understand that the world stone had been corrupted but i think Tyreal actions where a bit rash.
I if i could come up with a story line I would also have Belial as the final villian. I might throw in some kind of twist where Belial has dicovered a way to absorb the 3 prime evils to bolster his strength.
I think an interesting story might involve Belial fooling the hero and Tyreal into serving his purpose.
maybe the acts could be something like this:
1. plains or grasslands wih rolling hills. 2 towns seperated by entire area. hero must liberate 2nd town from some kind of boss monster. maybe an evil ogre or giant (it would be cool if some monsters were really big like 3x diablos size)
2. twisted forrest with trees that come to life. Maybe an abandoned castle at the end in the forrest. Hero must get through forrest to castle containing portal to hell. a boss could be some kind of wizard or demon.
3. hell with mounain terrain. Character must fight into Azmodan's castle.