I think you're selling them short.  Yes, there are likely to be a couple who are 'green recruits' and a far from their potential.  But others have been alive for considerably longer, and they all share at least one strength: an ever-present bank of knowledge in the form of an ageless fallen angel.  And this being has personally trained/indoctrinated them 24 hours per day for as long as they've had their coin, which in most cases will have been decades if not centuries.  With a handful of exceptions, they are likely considerably more powerful than the 12 or so refresh you grant them, which is barely more powerful than a young Harry Dresden early in the series.

I think adding the Demonic Co-pilot makes a good amount of sense, and it kind of surprises me that all of the stat-blocks don't have that.  I disagree with beast change; I think that Denarians probably do not sacrifice any of their capabilities when they look human.  Instead, their 'beast form' is more a personal preference and source of intimidation than anything else.  So Human Guise fits better.

I could certainly support that call; as I said it's something of a grey area and up for interpretation by the GM and/or the group.

One thing I meant to add but failed to is that it should be stressed that the Laws as imposed by the Lawbreaker stunts are metaphysical laws imposed by the universe.  Whatever they happen to be (as determined by the house rules) is what they are, and they cannot be argued away, rules-lawyered (by the character), or avoided by any means.  "If it doesn't fit, you must acquit" doesn't cut it, nor does "but I didn't know that the Warden would fall into that volcano I teleported him over, and then die!  I figured he'd cast a protection spell and teleport out!  Honest!"

This is different than the Laws as imposed by Wardens.  They *can* (in theory) be convinced, tricked, or hidden from.  Maybe.  In much the same way as a snowball *could* survive in Hell...

"Very old wizards get a bonus to hexing simply
from their age, which is why Harry can routinely
drive a Volkswagon Beetle while some members
of the Senior Council still have their sanctums
decked out like it’s 1599. This chart assumes
that the wizard is around fifty years old or
younger—as a guideline, set the “1 Power” category
wherever the wizard would start finding
the technology truly alien (so that special wizard
who was actually born in 1599 could probably
hex everything on the chart at 1 power)."

This assumes intentional hexing; a 300-year old character would probably start being mystified at Industrial Age stuff.  So around level 7 on the chart would probably be your baseline for deliberate hexing.  (Catapults are much older technology than anything on the chart, but such a character could probably still affect them with a sufficiently powerful hex, and 15 shifts relative to level 7 would likely affect anything even remotely technological no matter how ancient, so long as moving parts were involved.  Levers might qualify...)  Deliberate hexing is a spell, with the required shifts determined relative to your position on the chart.

Accidental hexing is a compel:

"Accidental hexing is handled as a function of
compels, usually of the wizard’s high concept
(or any appropriately emotional aspect)—something
gets hexed, it puts the wizard in a bind,
and that means the wizard’s player gets some
fate points."

So when the wizard becomes emotional or starts flinging magic around, the GM can choose to throw this at them.  But note that for it to be a compel, it has to somehow disadvantage or limit the options of the character being compelled.  So having the power to the streetlights die just when you're trying to sneak into a building isn't going to occur as a compel ... unless the GM decides that in doing so it alerts the clued-in special-ops commandos with the infrared goggles to the presence of a magical threat.  If so, enjoy the FATE point!  On a normal basis (when the wizard is calm and not casting), however, no accidental damage should occur.  Unless the GM thinks it should.

Yes, you can. Use the Orbius spell as a template. It grapples the target, holding them immobile, and slowly strangles them to death (dealing physical stress over time)

I'm not sure that's a good example.  That spell is simply a grapple, and grapples can inflict stress over time already.

It seems to me that the official answer is 'no'.  YS250 says step 2 of spellcasting is "Describe the effect in terms of one of the following basic conflict actions: attack, block, maneuver, or counterspell."  That said, I think it would be well within the spirit of the rules to allow the caster to divide the shifts of the spell between an attack component and a maneuver component.  So you might have a 5 shift attact spell that, if successful, inflicts a W:2 attack with 1 shift and allocates 3 shifts (more if the target has a higher defense) to a maneuver.  A good example of this might be a force spell that thwacks the target and knocks them to the ground (imposing a fragile "Knocked to the ground" aspect on the target).

As a house rule, this would need to have some buy-in by the GM and/or the group as a whole.  And while I don't think this would be overpowered (The straight W:5 attack would be more likely to inflict a more severe and more permanent aspect by way of a consequence), if it proves to be too powerfull in play, you could modify it to require a 'split' attack, with control roll successes split for purposes of overcoming defenses.  I think this would be rather weak, however.

The White Council has admittedly been tied up for quite some time by the war against the Red Court, and has had to be more choosy about pursuing rumors of Warlocks. 

I think Hobbit's got the answer.  Assuming the player discussed the concept with the GM and got buyoff (probably with an aspect beyond your trouble representing thepowers granted by the demon -- maybe "No longer merely mortal" or some such), then you could respond to the instant-kill with a concession along the lines of "That wound *should* have been a mortal one ... but I'm no longer merely mortal; I have a demon keeping me up and running [tosses over a FATE point]".

Possibly another way to represent it might involve a custom Sponsored Magic with very narrow abilities such as protecting from otherwise fatal wounds ... in exchange for a point of debt to be cashed in later.  This is actually very similar in effect to the Plot Armor method, but taken from a different angle.

Out of curiousity, has anyone asked a priest/minister/reverend what is actually involved in making holy water?

This might be of interest, though I couldn't tell you if this is 'authentic' or not.  Regarding your last point, I think that certainly in the Dresden 'Verse, the creation of 'true' holy water would basically amount to the channeling of divine energy through a person of true faith (or perhaps more specifically a cleric of true faith) into the water.  In spellcasting, the specific rituals are not integral to the spells, rather they are mechanical constructs to make it easier for the caster to focus his will.  I suspect that holy water creation is much the same: God is unlikely to care about the words that are said, rather the rituals help focus the mind of the cleric on his holy task.