I said Dent, not Two-Face. I think Nolan nailed the fall of Harvey Dent. As in the story (very similar to TLH) of idealistic DA Harvey Dent being inspired by the Batman and forming an uneasy alliance with him and Jim Gordon to clean up organized crime in Gotham. They're too successful and are targeted by the mob (and Joker in TDK's case) and Dent loses everything, including his mind and his decency.
That was told superbly in TDK and to do Two-Face again and to do justice to him, they have to retread ALL of that. Also, I never liked Two-Face being obsessed with 2s or a gangster, so I didn't mind that being cut. Could he have had more screentime as a villain? Yes. But he works best as a tragic villain trying to take sadistic revenge on those he thinks wronged him like in TLH and DV. At the end of DV, Loeb "kills" Harvey, because the story plays best with Harvey dying after bottoming out. Of course, he isn't really dead, because he is such an icon of Batman's rogue gallery. However, there is a law of diminishing returns and every time Harv comes back he is less tragic and sympathetic. Nolan understood this and doesn't have to worry about maintaining a status quo, so he killed Two-Face. And it honestly is the best way for his story to go, even if his villany was truncated to the last 40 minutes of one film.
I could see a Two-Face film, but it would mean redoing the first 90 minutes of TDK and trying to do it better. It also would be hard to find a more eloquent ending to the character that that film had.