Keep in mind that most of which that Cain has written is accurate in Diablo lore.
Also, it was pretty much confirmed by Rathma in the sin wars that the renegade angels and demons did indeed seclude themselves to reflect and that they were killed by Lilith before they could reach a dicision to spare or kill the Nephalem:
"In the beginning, the new children had seemed harmless enough, but when they had started to manifest powers, powers unlike those of their parents and with unlimited potential, the angel Inarius, leader of the group, had declared them abominations. Only barely had he been convinced by a few of his fellows not to act instantly. He and the other refugees finally had agreed to retire to their separate sanctums carefully to consider the fate of their children.
But among them was one who had already made her decision. Inarius’s own lover, the demon Lilith, secretly stalked the other demons and angels, slaugthering them one by one. In her madness and ambition, she saw herself as the saviour of the children and also, thus, the only one with the right to mold their destiny."
I doubt it, since the renegade angels and demons chose to obey Inarius and stay secluded, which easiliy allowed for Lilith to slay them as they were by themselves. Also, it’s implied that Inarius was the one who killed some of the ancient Nephalems who didn’t conceal their powers (or at least indirectly caused their deaths). For example:
"However, she had dealy underestimated Inarius. Discoverying her treachery, he cast her out of Sanctuary. Then, using the gigantic crystal called the Worldstone, which had been created to keep Sanctuary hidden, he had altered the artifact so that it caused the innate powers of the children to decline until they became so dormant as never to have existed.
Some of Rathma’s generation, called the Nephalem had protested… and they had been crushed. The rest had scattered, Rathma himself forced to hide beyond the mortal plane. Over the centuries, most of this kind had vanished, and the generations that followed grew up in ignorance of the birthright that had been stolen from them."
Or:
"The blade flared brightly, startling Achilios so much that he stumbled back. The light spread around Mendeln… and in it’s illumination,
Achilios saw ghosts.
These were not merely the specters of dead edyrem or servants of the Prophet, though. Their beauty, their perfection, was extraordinary. Human they looked for the most part, but human in the very same way that Rathma was.
They could only be the children of those who had founded Sanctuary… the first nephalem.
It was only where the light of the dagger shown that he could see them, yet there was just enough to hint that their numbers were greater yet. Achilios understood why they were present. These were those who had perished long ago fighting for the world upon which they had been born, the ones who had first sacrificed themselves for the survival of all their kind and later for the humans descended from them."
These imply the ancient Nephalem (1st generation like Rathma) died in battle and/or were killed, and also that it was likely Inarius’s doing (which was also confirmed by Rathma), as it was after he attuned the Worldstone to make future generations weaker.