You could perhaps try doing this as rebel demon armies that just appear in random places at random times. RTW already does this. The armies wouldnt pose any major threat. Just an annoyance. I guess the armies would mostly be composed of the undead (zombie ahigaru/samuri, hags, etc). I guess that would work. Not quite an entirely new faction but perhaps a bit more flavor for the game.
Also is there a way to allow no diplomatic relations with the demons. Or at least no bribing. I guess you could have other diplomatic ties though because oni and such are intelligent. There would have to be major consequences though for diplomaitc ties with the demons. Like if you allied with them then every other human faction would declare war on you. Stuff like that. But bribing demon armies is right out.
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