That's an interesting concept, certainly. As mentioned, of course, the race name would need to be changed. I think, rather than "cultist of x" it would be better to make up a race that is centered around demonic worship, name it something new, and go from there. Even something as basic as, e.g., Deathspawn, Hellbound, Half-Demons, etc., or something more novel like Tortradan, Bizouli, or (insert fantasy-esque name here).
Balance is another story. Obviously a race that is harder to manage but has greater upside isn't balanced from a competitive standpoint, and the walls certainly have greater upside. Everything else you suggested could work if well tweaked for balance, but it's also clearly outside the existing game structure and would require a LOT of work to implement. As interesting as it would be, I'd rather they finished and polished what's currently in progress so I can play the game, rather than waiting an extra year to develop this.
The idea of an in-game event is certainly a good one - that would mean it could be designed as time permits, perhaps after Reverie has better resources resulting from game income. Another option would be implementing as part of an expansion down the road, which would again mean more development and balancing time without sacrificing release date.
My last concern is that it seems heavily influenced by other popular modern sources (games, movies, books), at least stylistically. Obviously true novelty is extremely difficult, but the flavor is strongly reminiscent of the various WoW cults + WoW/WC3 undead. Even if it isn't, it might be close enough for Blizzard to sue. But that's just a flavor issue - something that can be altered while the mechanics balance is figured out.
I would be unstoppable, but for the laws of physics...and law enforcement.