Genasi,
I haven't gotten a chance to run with Garo's Malice yet, but I've checked out the screenshots of the upgraded version.
Assuming that Greater Incineration = Lightning Strike for overall damage, I just wanted to point out that it still isn't as much damage as a Lit II against a foe susceptible to both lightning or fire and weak to neither. They are very close, but I calculated the Lit II a few points ahead. This is doubly problematic when taking into account what the majority of end game is all about: devils, who happen to be immune to fire damage.
Of course, this does not take the Blinding Embers effect into account, since that is not a direct damage increasing ability, but would help anyone with sneak attack get more damage in. BUT, it still only pops up 5% of the time, so is not a reliable source of blinding-leading-to-sneak attack. Also, I think it's fair to mention that if someone wanted to make this item for the Burning Embers effect, they'd be much better off building a Rad II item, due to the fact that Rad II goes off on any crit. Sure, Rad II is less damage, but if blinding the foe is that important, the x4-6 chance of doing so is going to be worth it.
The goal was to make these items more desirable, and to that end, you've succeeded. I just fear that with this item, though it's more desirable than its previous incarnation, it still isn't more desirable than level 17 raid loot (Lit II or Rad II), and it just won't be pursued by people, and most likely would only get constructed because someone happened to collect all the pieces while trying to get a different epic item put together.
Perhaps some other damage permutations could be added to make it stronger? Like flaming and flaming burst? That'd push it just beyond Lit II for damage, and make it probably a bit more appealing vs. non-fire-immune trash due to the Burning Embers effect (but not strictly better than Lit II because of the nature of our endgame).
Or, Burning Embers could be upgraded to happen on any crit (essentially, Radiance II), which would make the item quite a bit more powerful than a Rad II GS item, and though it would be less damage than a Lit II, it would have a niche that it fills for sneak attackers. Even then, the Rad II rapier might still be more appealing for the +10% blinding chance, but this would at least compete against that due to the much better damage.
Or, some kind of exceptional, stacking Sneak Attack could be added to it (since it used to have Sneak Attack, and the flavor text clearly states that this weapon is supposed to be better against "unaware" foes), which would team up with the Blinding Embers nicely, making that ability useful no matter who was wielding the weapon. Maybe something like an exceptional +3 to attack and an exceptional +5 to damage if you're sneak attacking?
Just some ideas as this item is starting to look cool, but still doesn't seem quite worth actively pursuing. I think it still needs a little more of a boost.