I've read previously that the intention was initially to have him as a rogue member of the Doctors race, though I think even in implication it's a little fuzzy. I don't mind the Doctors speech being retconned if they ever wanted to bring him back as a Timelord. I'd rather him than the Master.
Me too. The Master in the new series has never worked for me. He's just not as good as when he was in the classic stories, though I think if Derek Jacobi had longer in the role he'd have done a great job.