Actually, I think I may have seen some hell spread in good lands in my last game, although I suppose the good lands may instead have spread into hell. It doesn't disappear right away when the territory changes hands.
That was a very interesting game, where the AC stayed in the upper 90s for a very long time, and frequently reached 100. The Armageddon events had wiped out everyone but Infernal and Elohim on one continent (but the Elohim won't last much longer), but left the other continent with Cardith, Morgoth (my original player), his capitulated vassal Perpentach, and 3 different Basiums almost uneffected. Yes you heard right, 3 Basiums (Basia?), each of which got a free angel at the death of each good living unit. This was with a significantly modded version of .25k, but I had forgotten that I had made the Mercurian Gate a Nation wonder instead of a World wonder, allowing every civ to summon a different Mercurian Civ lead by its own Basium. When I first tested the change it seemed to cause a CtD, but I guess that was unrelated because I forgot to change it back and it worked fine. Well, I eventually got a CtD, But I had already been playing as the third Basium I summoned for about a hundred turns.
By the way, are Angels supposed to turn barbarian at the Wrath event? I thought it was only supposed to effect living units.