Interesting setting... you may want to look at The Shattered World (and sequel, The Burning Realm) by Michael Reaves for inspiration. It's a very D&D-like world in some ways, which has been broken ages ago - people now use skyships to travel from one piece of land to the next. 'Demons', named chtonians have the power to teleport and are therefore of great use to potent and more or less sane wizards - their leader is, of course, the Demogorgon.

Fun stuff.