S t o r y ;
Mugetsu is the leader of the Mikado special forces a.k.a. MSF. I'm not sure exactly how high-ranking that makes him overall, but judging from what Echidna says in one point of the game ("Now that Mugetsu and PD-4 are out of the picture, I shall become number one!"), apparently he is somewhere up there.
Mugetsu has exraordinary physical powers that are the result of a brain surgery - lobotomy - that was done to him to enhance his fighting abilities. And apparently they succeeded, at least partly: while his physical abilities are now superhuman, his sanity suffered a great deal. So great, in fact, that we can only try and guess what he was like before that god-forsaken surgery. Mugetsu is the perfect example of how foolish and reckless humans are with the knowledge they have.

Mugetsu is seen for the first time at the very beginning of the game as he jumps off a helicopter with his henchmen right into Dominique's apartment. After discovering that she's not home, they set off to the bar Fate where Dominique often hangs out. There his henchmen distract the three bouncers while Mugetsu executes the kidnapping itself.
Their second encounter occurs at the hanging garden of the Mikado building, where the bouncers are trying to make their way to the crystal dome. They are detected and surrounded by several guards and dogs, after which Mugetsu makes an appearance with some backup. He taunts Sion for "having his woman taken away from him" and intimidates him by saying that he'll never get her back. Mugetsu along with his henchmen are defeated, of course, and the bouncers continue their journey.
They meet for the third time at the Mikado building where the bouncers have been locked. Sion has managed to escape and is trying to find either his way out, his friends or Dominique. Well, he does find her, suspiciosly laid out on a sofa in a dark and seemingly empty room. Lo and behold, out of the blue appears Mugetsu and starts choking him from behind (I swear, Sion wouldn't spot a trap if it bit him in the ass). Unfortunate for Mugee, Volt has also escaped and throws an MSF soldier - who turns out to be Kou - at him, making him lose his grip. At this point Mugetsu gets really pissed and loses another screw, which is symbolized by him ripping off his goggles. A battle occurs between the bouncers and him (plus his henchmen), which he inevitably loses.
The next encounter is rather brief - after the battle with PD-4 and after Dominique has passed out again, Mugetsu arrives to take the girl away. He shoots off a few threats at the bouncers and then disappears with Dominique.
The 4th and last encounter occurs as the bouncers are trying to get on the giant spaceship, Galeos, with an air-carrier. Mugetsu can be seen on the Galeos' roof, and it's quite obvious he's losing even the last scraps of sanity he still had left, and as if to emphasize this he completely gets rid of his mask. He then performs an almost suicidal leap to the air-carrier, where he attacks the bouncers after threatening to "butcher all of them" while laughing maniacally. Not very surprisingly, though, he loses the fight and falls off the air-carrier while trying to convince himself that it's not over yet. His fall is interrupted by the boosters of the Galeos which ignite just as he's at the level with them - thus, he gets caught in the flames and is burned to death.