I don't think Giles is dead (considering there are still some rumors of a BBC Giles mini-series). Overall this was yet another good episode of Buffy (amazing how much better this season has been when compared to the last one). I really enjoyed the good cop/bad cop thing with Anya and Xander and the conversations between Buffy and Spike proved to be revealing for both Buffy and Spike. I am surprised though that it took the Scooby gang a long time to connect the dots between Spike seeing things and the big bad. The Vampire does look a lot like the master but I wonder if it could be a vampire that sired the Master (?).
As for the Council, I don't think that they will be dead - I have a feeling that they could be operating out of a different office but that there main office could now be gone for good. Also the call upon all of their delegates from around the world could be the reason that Faith returns. While she is in jail they do have links all over the world and could probably pull some strings to remove the slayer from prision. Looking forward to the next new episode and still wondering how this ties into the events of Angel so far.
"Never give in--never, never, never, never, in nothing great or small, large or petty, never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy."
- Prime Minister Winston Churchill
"Si vis pacem, para bellum."