Well dear Brett, relativity is simple once you realise space-time is curved :D.
I'll try to explain again. Indeed you are right that point C has nothing to do with calculating the bearing from A to B, so lets stop thinking about C for the time being and concentrate on going from A to B.
If we use the 2nd formula to calculate theta-AB, the line Yb-Ya will always be the North-South line. So the 2nd formula will always calculate the angle between North and the line AB. In the picture theta-AB will be 45 degrees. So if we start in a certain point A and we want to walk in a direction between West and North, than using equation 3 we can calculate the bearing by substracting theta-AB from 360: BEARab = 360 - 45 = 335 degrees, huray.
Now arriving in point B we want to walk to point C, which is in NE direction. If we use the same algorithm as above, tetha-BC will be the angle between North and the line BC, which also happens to be 45 degrees. Continueing with the same algorithm, BEARbc = 360 - 45 = 335 degrees. Now when we walk NW like we did when wlaking from A to B the bearing is indeed 335 degrees, but walking NE the bearing should off course be 45 degrees.
So I can't think of one algorithm, like the one above that will alway calculate a correct bearing. In fact, the above algorithm will only calculate a correct bearing when we walk in a direction between East and West (clockwise via South). Walking in a direction between West and East (clockwise via North) the last step in the algorithm should be: BEARab = theta-AB.
So now I am looking for an IF/ELSE function within Excel that calculates a TRUE/FALSE condition on basis of which is determened which equation should be used in the last step of the algortihm.
It could go like this:
IF Xb < Xa THAN BEARab = 360 - tetha-AB ELSE BEARab = tetha-AB
Hope this helps,