The way it works
The whole sale of 'surplus' RAF Eurofighters is actually a great way for getting a free (-ish) upgrade from Tranche 1 to Tranche 2/3 aircraft. Given the step change in capability between the tranches, it's worth selling on aircraft that aren't immediately needed in order to get replacement aircraft of a better spec at a later date.
In effect you're just swapping delivery slots, trading delay for upgrade.
Not that the Saudi aircraft will be exactly to the standard spec, they have all kinds of toys but usually not quite as good as the original eg. component downgrades, deleted features (eg. some of the secure comms modes), that sort of thing.
Though even if the aircraft were exactly the same, I like to think the pilots still make a difference and the UK is still slightly better on that front.
And the 'Saudi-ised' in-country production doesn't necessarily mean much, usually it just means a large group of Brits putting the kit together in-country. The locals usually couldn't care less about the technology, it's just a way of keeping hold of the cash - if the work is being done in Saudi then at least some of the cash being spent will stay locally. Also it provides for all sorts of legal ways of getting cash to various local VIPs, but that's another story...
Making payments to various people has long been part of the way business is done, especially in the Gulf. Everyone does it, it's all in the open, and there isn't anything unusual. Plus it's legal. And lets face it, what's wrong with paying the locals with their own money - they pay you, you give some of the cash back. And they're the ones who have to justify the money they've to the rest of the government/family.
Finally, having heard some of the stories from those involved in the original deals, direct payments were just one of the ways certain people could get cash. Others also existed, and all were legal. For example, a Saudi company would provide all the accommodation for contractors, at cost above the normal market rate. Said company owned by a VIP close to the deal. Not exactly clean, but legal enough. And no-one will complain as it can probably be counted as part of the local offset due under the contract.
The Saudi Tornados don't seem to be doing too badly, for all the rude things some people have said. They're keeping them for now, with a sustainment program introducing quite a few upgrades to take the remaining fleet to something like a 'GR4-lite' spec capable of supporting the latest toys. F3 spec may be gone, but the airframes are still useful.
As far as the Lightning II argument goes (don't think you mean Raptor, at $200m each!), they aren't actually particularly cheap unless you fiddle the numbers and hide a lot of the costs. The Eurofighter in unit cost terms actually isn't too bad in terms of cost/capability. In the Raptor/Eurofighter equation, the >3:1 cost ratio between the aircraft means there isn't any argument, Raptor might be slightly better (depending on the tactics employed) but if you can afford a 3:1 force ratio 'slightly better' isn't good enough.