((I'm sorry guys! I'm back. My pain medicines were strong enough to sedate a horse. ;( Ok, answers to questions:
1. For demons, there is a karma process. Dying from a life of no regret or reform from the evil nature residing in the demonic nature brings them to a Valhalla sort of place. Here though, instead of dying in battle to get in, they are admitted on their evil deeds. This place is known as Dalim Isle. The sea around the Island has floating dead souls in it. When a demon dies, the demon`s soul wanders over the sea and over to the Dalim Isle, where their souls can rest in peace of bloodshed and bitterness of eternal battle. The Island is also crowded with different kinds of forbidden creatures. Up on a mountain lies a castle, over 10.000 year old. Up in that castle lives a powerful demon lord, Einon, that controls most of the Island territory and the creatures living there.
On the other side of karma, God watches over demon actions and behaviors. On chance of a demon seeing the evil nature within himself and fighting his inner desires to become righteous and does so successfully with a glad mind, he may be given a second chance in a fallen angel or human body as a form of ‘probationary recreation’ for 50-200 years. If successful probation is achieved, they ascend as newly born angels. Most of these rare demons are often the ones to fall in love with humans and siring fallen angels. Not to say that is how all fallen angels of demon heritage are born. No, the human mother may have been a victim of a demon encounter more then likely.
All of that is just for demons...My writing muse has returned with vengeance. Lol
For angels, they are agents of God’s providence. Angels never die like humans
(Luke 20:36). They possess superhuman intelligence and powers (Mark 13:32; 2 Thess. 1:7; Ps. 103:20). They are called"holy" (Luke 9:26), "elect" (1 Tim. 5:21). They are redeemed in glory (Luke 20:36). If they parish in service to God, they are returned to God in soul form for a new duty assignment of His choice. The exception being is if an Angel betrays God’s service. Imperfection is ascribed to them. (Job 4:18
; Matt
. 24:36
: 1 Pet
. 1:12
). As free-willed creatures, they may fall undertemptation; and thus we read of "fallen angels" in the Bible, even though fallen angels differ inthis story. We can only guess at the cause and manner of their "fall." We know only that fallen angels "left their first estate" (Matt. 25:41; Rev. 12:7,9), and that they are "reserved unto judgement" (2 Pet. 2:4). And thus, if an angel betrays the Lord, he is cast as a human on earth to await judgement.
2. Fallen angels, thanks to their human heritage, have souls just as humans. They are far more immune to disease and general sickness then average humans, but tend to age and are as susceptible to injury as humans. Their life spans can extend into the low 100s. On average, 8 out of 10 fallen angels have limited ‘inhuman’ abilities. The ones that some of you are playing are going to be born, if from demon background, from a stronger sire then an average demons. Their souls are judged just as humans.
3. I’m going to consider the middle ground as earth. If you describe to me a condition you would need a middle ground else where, I’m sure I can get something.

As for demons in heaven, no. Not unless they ascend as angels after probation on earth.
4. Hell is arrange into 3 dimensions stacked on top of each. The first is The fathomless Pit, as in the Bible. This is where human souls are cast into torment by demons. This dimension is accessible to all demons save for those so weak, they feed on human souls.
The second dimension is the world of demons itself. Yes, cities exist, civilizations raise and fall, and demons live and populate as close to humans as their savage natures let them. Smarter, more cunning demons often arise as rulers of towns, cities, and sometimes, short lived empires. Think if it as the either the ‘feudal warring-states’ era of Japan or the ‘states’ of Greece or the ‘clans’ of Scotland and Ireland.
The third dimension is the Sea of Fire in which Dalim Isle exists. This level is only open to the dead souls of demons and strong demons capable of taking full human form even though they are monestrous demons. These are the high ranking demons that enjoy torment of humans and demons alike and that truly despise God.
Right now, all in normal in the first realm of hell. In the second realm of hell, there has come a stalemate between rulers of land and armies. It’s fairly quiet. In the third realm of hell, the quiet of the damned demon souls is almost eerie....far more unnatural then any banshee scream or a rasping last breath.
Also, before this question is asked- If a fallen angel has a child with a human or even another fallen angel, that child is fully human. And fallen angels
can get along even if one has angel background and the other as demon. It is up to you and if your character was raised with their demon/angel parent. An angel parent is granted to stay with a partner on earth if they fall in love with a human. It is seen as forbidden with a demon partner, unless that demon is one of a ‘probationary recreation’ form, even then it is frowned upon until the demon partner has ascended as an angel.
Ok, it’s currently a little after midnight, so I’ll post more in the morning. This is to answer GrayAngel’s great questions.

More later! ))