TLJones didn't know anything else about Two Face, he wasn't familiar with the character and originally turned it down until his son told him he loved Batman. Tommy Lee signs on, he hears that Riddler will be comical, Jack was comical in the first film, and in the original tv show, all of the villains were over the top so he figures "I'll do the same." Same thing goes for Arnold in B&R. Forever was a massive success, so Arnold signs on and everyone sticks with the "comical villain" formula, as it had been successful every previous time.
When Forever was in production, there had been two other films and the former tv show. The first film had an over the top villain as did the show. Returns went a more dark route and got alot of negative views. I may not have liked it much, but I definitely see why they went that route.