The ending is supposed to be ambiguous... perhaps Wiglaf will continue the cycle Beowulf tried to stop. However. The entire premise is based around the idea that this takes place in our reality, and we have been reading the incomplete/glorified story for hundreds of years. In the past there were great heroes and all manner of creatures: Demons, Nephilim, Sea Monsters, Mermaids, Dragons, super human heroes, etc. Now there are none... which is a big theme of the story. Therefore, either Wiglaf or some other hero down the line will slay Grendel's Mother (she being the last of demonkind) and by the Renaissance we have reached an age free from these beasts. So in a way, it's a Fridge Hope ending.
Grendel (and by extension Grendel's mother) are said to have descended from Cain, the first murderer. HOWEVER, tradition states that Noah ISN'T descended from Cain, and his family is the only family to survive God's flood. The flood would've wiped out all traces of Cain's family line. Therefore, Grendel's mother being a water demon makes perfect sense. It actually solves a plot hole.
Well, that's only if you discount Noah's wife, who was a descendant of Cain in certain Jewish traditions. Which would mean that all of the characters depicted would be descendants of Cain, not just the monsters. That makes the poem fall rather flat when you think of it, but would tie in rather well with the movie's themes of hypocrisy.
The above only works if one discounts the other people on the Ark. According to the Scriptures of the Abrahamic faiths Noah, his wife, their three sons and their wives were on the Ark. As a result, one or more of the wives of Noah's sons could be descended from Cain. That way there are both people who are descended from Cain and people who aren't descended from Cain thousands of years later.
Grendel's mother got her revenge on Beowulf by arranging for him to share Grendel's own fate. They were both annoyed by the celebrations of the Danes, Grendel because of the noise and Beowulf because he knew their admiration of him was based on a lie. They both demonstrated an immunity to the blades of men, Grendel because of his supernatural heritage and Beowulf because Finn couldn't go through with attacking an unarmed, defiant Living Legend. They both tore enemies apart bare-handed, and they both had an arm taken off by Beowulf in their final battle: a knock-down, drag-out fight between Beowulf and one of the Water-Demoness's sons.
Animal sigils:
Beowulf uses a wolf when he is a hero and the king's dragon when he is king, but his Viking Funeral has a wolf sigil, not a dragon. Beowulf returned to his true self in his death.
All the kings (Hrothgar, Beowulf, Wiglaf) use the dragon sigil. All of them became kings for defeating a dragon or dragon-like creature (Wiglaf killed the dragon in the poem, unlike in the movie). Of course, this was all a big lie in all three cases. Before Christianity made it a symbol of evil, the dragon was the personification of power because it was the most powerful animal, so it makes sense as a king's sigil in the story. Out of the story, it also makes sense to be the sigil of these kings, because dragons aren't real, just like their claims of heroism.
Despite Beowulf's reputation, the Geat Warriors (Minus Beowulf and Wiglaf) almost certainly weren't expecting to actually fight a monster. Hondshew didn't see any problem with making out with one of the local ladies during the night Grendel was going to show up, and the entire assembled force was shocked when they saw him burst through the doors. Most likely the Geats thought the "monster" was a giant bear or other animal and that the excursion to Denmark was going to be an easy pay day.
Hrothgar states that Grendel's mother is the last of her kind and that with her gone demonkind will be no more. What is Hrothgar basing that assumption on? If he's wrong, even assuming someone finds a way to slay Grendel's mother, how does he know that there aren't other demons out there who could be just as dangerous or even worse than Grendel's mother?
If Wiglaf didn't accept Grendel's Mother's deal at the end of the film, there's basically nothing to stop her from wreaking havoc on the lands by her lonesome. After all, she has the element of surprise on her side since everyone believes her to be long dead.
