Kerrigan turns into a xel naga space god that can change forms at will.
The reason she doesn't look like a xel naga is because blizzard didn't want to turn their waifu into a freaky tentacled space elephant.
The ending is fucking retarded and here's hoping it's never mentioned again so we can move past it and forget it ever happened.
No reason is given as to why she waits 2 years. She just does because lolidk.