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Well, You have to remember that Jyggalag didn't necessarily want to WIN that fight, but he still had to fight. Mehrunes Dagon isn't the most powerful, he just really enjoys destruction. There is another topic floating around discussing which deity is the most powerful in The Elder Scrolls, you should check it out.
Nah, even though he still got kicked out of Mundus, he's all about Destruction, Revolution, and Change. He destroyed an empire through the revolution his followe.r Mankar Camoran, led against it. And he brought about the change of an era. I'm sure if he was still angry about it, he would've said made sure to mention it when you speak to him, but he seemed cheerful as ever.