Kaga has been changed into a random encounter. You still have high odds of running into him close to Arroyo - Klamath, but unless you wander around looking for him it's no longer guaranteed. If you miss him you are very likely to run into him at a later stage anyway, so it's no biggie. Mynoc the bridge guard in Arroyo will talk to you about Kaga (AFAIK he's the only one). Kaga's health is a problem. He has a high one so as not to get killed too easily (his fleeing routine hasn't been working but hopefully we've managed to fix that, or at least made it better). We've also tried to disable knockouts on him, but there was a problem with the text still saying he got knocked out. Don't know if killap managed to fix that. He is set to run off when taking a small amount of damage as the encounter would be too hard otherwise.