I dont know if this has been answered yet but couldnt find out. When the ability is used, what happen to the 2 unchosen damage cards? do they go back in the dmg deck? If so where: top, bottom, reshuffle?

I believe they are 'discarded' and would then be reshuffled into the damage deck if it ever ran out

Is there such a thing as a discard pile in this game?

4 minutes ago, Thormind said:

Is there such a thing as a discard pile in this game?

There is for Damage cards. Rules Reference, p9, "Damage".