[Cohen]

Smite Demon is almost useless, since MR is checked and often they avoid to take any damage at all

Marignon is suited to fight undead and demons ... the Holy Inquisition!
Really the holy magic isn't so good (if we compare especially to unholy that can raise MR of Undeads and raise their stats), and the damaging spells like Smite and Smite Demons aren't very good since MR check occurs.

Considering Holy Pyre should strike properly (I mean hit the target), and it's area damage to that it could strike eventually your troops fighting the demons, I don't see it too strong if modified in this way.

About the level of protection, I believe the Magic Penetration is already considered, since if you've a mage with more magic levels than the spells's required ones it improves to Magic Penetration.

However it could be nice than even the Elemental Resistance were like Magic Resistance ... I mean a Fire2 mage could cast a small low burning fireball, a Fire9 mage could cast a fireball far more hotter and bigger that could ovverride a 100%Fire res ...
With a formula similar to the MR Penetration it could be implemented the Resistance Penetration.