In hindsight I actually think that this part of the game was very well played-out.
Speaking entirely from a story POV, by that point in the game we/our character have beaten numerous enemies, Primals, and fought Dragons. We go into this fight with a sense of confidence, all those past victories in mind... and then get our arse comprehensively kicked - and the worst part is Zenos didn't take the fight particularly seriously at first (and when he did we found out the hard way!). WoL being defeated was clearly a surprise to our allies, and humiliating for the WoL themselves - but it was also a necessary wake-up call.
After all those fights, and being treated (by the Scions etc) as an 'we win' solution to pretty much any problem involving a battle, we get taken down a peg and reminded that we're not some invincible god-slaying deity and sometimes our best ISN'T good enough. I feel this was necessary for the story and worked well for character development in the long-term, both for Zenos and the WoL.
The fact that numerous players expressed hatred toward Zenos for this suggests that it was successful OOC too. He's a villain - you're SUPPOSED to hate him at that point!