I'm not sure about this intepretation; I was thinking it was more supposed to be a completely deliberate cycle of how the Bionis was sustained in Xeno1, with people having to be consumed for their ether to keep the Bionis going (as a source for Zanza, but they didn't know that at the time). I don't think there's anything we know of right now really suggesting that there was some infinite power machine keeping the world going that was lost in the aftermath of xenoblade 1.
Certainly, if that was a thing that existed, the previous "god", Zanza wasn't aware of it either (or he wouldn't have made such a point about absorbing other lives on the bionis to keep himself going)
The conduit is what powered the machine and the Trinity processor and it's ai's that was created to safe guard it's executions.
As described in Xenoblade 2 it was discovered in Africa, and found to be a seemingly infinite source of power, along with seemingly other.... things. It was quickly fought over and abused, and powered a reality machine that was activated without testing or calibration, just sheer hubris, which dismantled most of the surface of the earth and the things on it, into raw atomic resources, ready to be repurposed into new creations. The guy who pushed the button did feel kinda bad though.
While the xb1 fanbase already assumed a Zohar had to be power source behind the low orbital station and the experiment it conducted in the end of xb1, xb2 confirmed it, along with expanding the context of the expiriment scene to show it's urgency and stress, making Klaus a more sympathetic character, if only a bit. In Xb2 the Zohar is called the conduit. It also powers... Powered everything from every blade, aegis, the world tree/bean stalk, the world ring, the artifices.... Everything.
At the end of Xenoblade 2, it shows the party from xb1 defeating zanza. When shulk kills zanza, makes the command for a world without gods, we are shown a scene of the conduit, simply disappearing. At this time due to its disappearance, the Artifices deactivate, and Rhadamanthus begins to fall.
I highly doubt shulk/alvis actually have the power to unmake a Zohar, so it likely was simply sent somewhere else, where it restarted the cycle it always does with another civilization in a other dimension.
Zanza bastardized the cycle, to purposefully keep the bionis, which was himself, going, because he was afraid of death. He kept hoarding and recycling resources as you described soley to keep himself going. The machine was able to bastardize the law of physics, but not break them, or truly create it's own. Zanza could never keep himself alive forever, what he would do, was bring about a very premature and forced heat death of the new universe. It's why alvis kept saying this universe did not have long left. 'Even 'god's' are 'bound by the Providence of the world.'