For some odd reason, the Ego bar actually makes sense to me. Even the having to hide to replenish it part. Why? In my imagination, when Duke hides, he's totally freaked out about what's been happening. Obviously, judging by the lack of health, things hadn't been going the way that they "should be." The enemies that should be shooting wide off their mark are somehow hitting him, and they're not dying with the ease of the enemies in his inner world's fantasies. Things are not going according to plan, and Duke's ego - the fragile thing that it is - cannot stand up to it. He's essentially shell-shocked. When Duke has to hide to replenish his ego, it's in much the same way that a person who's just had a confrontation with his/her boss goes someplace private to regroup. (S)He goes in there, pulls his/her shit together, and gets back out to get some work done.
Perhaps I'm giving the developers too much credit, but I see it as an ultra-tongue-in-cheek joke about the character. His ego is everything to him, but at the same time, it's quite delicate -- maybe a little too delicate. The whole world rides his nethers over something that he did years ago, and he's had to listen to all the glowing praise he'd been given. But, inwardly, he's afraid. He's afraid of dying. He's afraid of failing. He's afraid of being exposed as a fraud -- a fraud who got lucky all those years ago. And, if he dies in some corridor, somewhere, all of his fears come to fruition. He dies. He fails. He's really a fraud who got lucky. And, his ego can't handle it.
With all that said, I've never been a fan of Duke Nukem. The series just doesn't appeal to me at all.