I agree there is a definite connection between the Bakunawa Killer and Lau Chan. My guesses are:
- As you said, Lau Chan. Either a clone or rejuvenated yet mind altered. Likely the work of J6.
- VF3 mentions an apprentice for his restaurant. While likely a master chef, never states if Lau Chan trains him in Tiger Swallow Fist. VF4 states Lau Chan could not find a worthy successor to teach Tiger Swallow Fist. Given Pai Chan was familiar with Bakunawa Killer, it could be a close associate to Lau Chan.
- Here's a curve-ball... while the anime is not canon, Liu Kowloon could be brought over. In the anime he was the acknowledged apprentice of Lau Chan and was betrothed to Pai Chan, however he turned his masters teaching into a criminal organisation given how power hungry he was. While he was eventually killed, given the anime is non-canon, his story can be re-adapted for the game.
I do think you're right that it is Lau Chan. Bu-u-ut, it seems a bit too obvious? Like, what's the point of giving him a mask and making it look like a mystery?
The mistery is his backstory. He's using a mask because he's wanted to be an unknown person doing his job as a killer. It's just that Pai somehow could knock out his mask.
Well, there is other theory that it could be Lei Fei. Historically, Lei-Fei is an assassin from a Shaolin sect who sought to steal Lau Chan's forbidden technique. But that theory is failed to explain why Pai Chan is surprised to see him.
