I think the demon spawn rate needs to be adjusted. I love the idea, but it seems they routinely remove multiple AI civs, razing all their cities in the process. This sends the AC higher quickly, summoning the horsemen, which the already-reeling AI simply can't deal with.
Perhaps the demons that spawn should ignore the human's tech level? As the system is now, I think you could play a peaceful OCC, build the Prophecy of Ragnorak, tech like crazy, and watch Beasts of Agares stomp the AI civs into the ground.
I don't think we shouldn't decrease the demon spawn rate. (After all, if you hate the demons so much, you can do a custom game and turn demons off, same as with Savages and Animals.) Instead, imho, the AI needs to be programmed to do 2 things...
1st, the AI should build more settlers, to increase the amount of cities worldwide. I'd say a x% increase in how often AI builds settlers. (I'd prefer the x% increase be below 30 myself, to avoid any issues with balance.) The reason for this is I've noticed that certain civs, even in lategame (after turn 550 or so [remember I use epic speed; and by turn 550, only a few techs are yet to be researched]), never build more than 5 cities, which are usually low pop. (By lategame, you'd think they'd have settled more cities than 5.

It's kinda lame, imho.

) Most civs, by this point, have 7 or so cities, which isn't really enough either.
Of course, part of this is a few civs lack good

terrain/resources. After all, only the Malakim survive well in deserts.

Another part of it is that the AC is high enough that at least 1 or 2 plagues have come and gone. (Those seem to hit the AI hard, cuz the AI never seems to get that it needs to focus on pop growth after a plague ends.) I wouldn't change the frequency or harshness of plagues, but I'd suggest the AI be programmed to conduct the ritual "Genesis".
2nd, the AI still never spends gold, except to offer to buy techs for rediculously low prices. (500 gold or less, along with offering their world map

Thanks, but no thanks.

) The problem here is that some AI civs rarely upgrade its archers or axemen by lategame. (Or neglects to build new longbowmen, champions, and other units; and then never uses their obsolete units as fodder, of course, since those units are still sitting guarding their cities.) This isn't always true. Usually civs with hostile neighbors upgrade their units. But civs that are either fairly isolated or have friendly neighbors rarely upgrade. As a result, by the time the Demons start spawning bigtime all over the world, these civs either get their cities burnt to the ground or just flatout get destroyed by the barbs. This could be due to these civs never being able to generate enough revenue.
A prime example of this problem in my last few games are the Sheaim, under Tebryn Arbandi and with AV as their religion, and the Lunan, under Hannah the Irin and with OO as their religion. (So, the Lunan are evil, not neutral, as they are by default.) Both of these civs were fairly close to each other, but no one else.
The Sheaim got absolutely raped by the Demons. In fact, I felt so bad for them that I perodically would use WB to give them free defensive units and settlers. The idea was that, eventually, they'd be able to fend off the demon attacks. (Btw, with AV religion, why aren't the Sheaim friendly with the Demons? Why aren't all AV civs friendly with the Demons? Of course, the Infernals are, but it just makes sense to me that ALL AV civs would be. Maybe someone could explain this to me...) Unfortunately, it didn't work, so I just let them die eventually.

I wasn't AV; I prefer OO; but hey, "Sacrifice the Weak" anyone?

The Lunan, of course, were the next to get raped, always in exactly the same manner and then also were wiped out quickly.
(Btw, I usually play on noble or on increasing difficulty setting on a hugemap like Erebus [with no sharpening of mountains, since my PC can't handle the sharpening] on epic speed. I also usually have 13-16 civs on the map total. It's a little much, but I like to see 1 or 2 AI civs get conquered...by me or someone else.)