This was interesting. I liked how Gwain found out about Merlin's magic when he followed Merlin and ended up meeting the dragon. And that was kinda funny how he was like "How does Lancelot know?" when he learned that Lancelot also knew about Merlin having magic. And Arthur changes the law to allow magic to return, with the exception of black magic still being punishable by death. :)
And if you want to do a sequel, I say go for it. :)