That's a very wholesome headcanon and probably the most positive way this could all go. I haven't decided on any specific conclusion yet, and I'd like to I'll see where the story takes me. ^^ (might be an option if i make branching paths? we'll see 🤔)
I'm thinking the wars would be fought between the human warlords and the human-demon conflict would be a separate issue (with the possibility of warlords recruiting demons for war to spice things up, I guess?). I'll need to find a good balance in terms of the demons' power and motivations though, so that the whole set-up makes sense. (and the demons can't just destroy humanity on a whim lol)
I love the demon thing, too! Both for the aesthetics and the subtle connotation of being not straight in a conservative setting. ^^