I have reported this at least once before. It is the same in book 2 (haven't tested in book 1). What happens is that the HP increase for playing on hard/ultra is applied again for the new fight (which it should) but instead of applying it on the original HP of the boss, it is applied on the HP the boss had last time where the HP increase was already applied. And if you load again it will be applied once more. It is a way to get really, really difficult fights if you want.
His status is reset every 2 turns. So you can't build up fire damage or ice damage (except for a end-of-board with multiple firestorms + katie where you can build up decent damage). Much better to build up your own buffs, i.e. rage and shields. And make sure to use Barrier at end-of-board to block out the massive poison damage. Dylan is nice to have for regenerating at least some of the HP caused by the poison hits.
I got up to 36k rage and finished with a 225k damage clusterstrike.