Ok, we have something of a fix. It's not a full fix, and I am still a little concerned about this problem coming up in the future, but at least I can keep an eye out for it.
Like I mentioned in a comment on the original post it seems to be linked to Better Ghosts, however I don't know if this is actually a problem with the mod or rather an issue in conjunction with my other mods. Way more testing will be needed to really know, but I'll be honest. I am just not up for all that right now. Just want to get back to playing. Seeing as there doesn't seem to be any massive/obvious issues I'll let it be for now.
What I ended up doing to fix my current issue and some additional thoughts below for those interested :)
The Fix: What I ended up doing was simple. Simply resurrected him with the manipulator and killed him off again with Better Ghosts removed. In another test/fix I backed up to before his memories were fucked, and did the same, but put Better Ghosts back in before I moved the grave (in an attempt to retain his "death by sick" state). That still kept him as default/uneditable, but his memories were still wiped and defaulted. This time however his wife wasn't the subject at all but rather 'Mystery Sim'. No idea what's going on with the memories since the other sims who died of old age have retained all theirs just fine.
I think it must do with how ghosts are handled with their death state in Better Ghosts. Death of old age is, as I understand, untouched?(mostly?) by the mod. So anything else requires them to be handled differently and in this case it was turning him into a townie, and when I moved his grave it for some reason reset his memories to something like a default townie's. Why he wasn't staying in the default household, and kept slipping back into the townie category I cannot figure out (it did end up happening a few times) so I'm going to hope that the way I fixed it will stick. I also have to say I have no idea if it was even a problem that he *was* a dead townie. In game there was no real effect other than the weird memory thing.
I still have some memory clean up to do with the living members of the family because of that weird hiccup, but everything else seems to be fine. Maybe one day I'll bother to fix Damian's memories too if it really bothers me, but I don't see him being resurrected (for real) at any point so there really isn't a reason to. Except for my own anal tendencies telling me it is.
Was listening to this newish Mazes mini album, and was surprised to hear a Yellow Fever (Deep Time) cover! At first I was confused and thought maybe they were both covers, but Yellow Fever is given writing credit on the Mazes recording. That's about the most random cover I'm come across in a while.