That's, uh, not quite correct, although I'm only familiar with American copyright law. Fair Use, where it applies, allows as much material from the source as you want, although using a smaller amount can help your Fair Use claim if it goes to court. At any rate Wizards can only copyright the text in their books, not the ideas, which is why they can't stop us from creating derivative works such as the OPs proposed Redux. As for using names like Asmodeus, that's trademark, not copyright. I have no idea whether Wizards has trademarks on those names but it seems to me they should not. They do have trademarks on thing's like Bigsby and Mordenkainen which is why those aren't in the SRD.