everyone has probably left this thread long ago (to jump on another inuyasha or conan one), but i will chime in.
my take is different from yours. i thought the second season destroyed the first. it got so deep into the symbolism that it painted itself into a corner and had to use a deus ex machina at the end to escape -- and thereby destroyed any meaning a third season would have. the manga was much better (tho dorothy was better live).
as for paradigm city, the city itself always seemed to be new york, and the name a generic one invented when everyone forgot the name. but of course the end implies it's not a real city (patterend after NY?) at all, or real people. so who knows?
ever see the movie "dark city"? i picture that as paradigm now.
"does a man have to admit he's lost before he can be found?"
trust me. i know what i'm talking about. i've read books. well...chewed books.