Dai-Oni make outstanding battle mages, able to cast all the heavy hitting spells from Fire, Earth, and Death, once you deal with their horrible encumbrance. Get them out of their armor (the lighter the better, but anything, even Steel Plate, is better than their heavy samurai armor), give them some reinvigoration items, and maybe even think about a light Earth bless. Oh, and casting Summon Earth Power at the beginning of battle is a good idea too (all of them can do it).
It helps to think of them as four different units, depending on the random. If you get one with F3, well, Phoenix Power will get you to F4, good enough for Falling Fires spam, etc. Give him a Skull of Fire, and now he can cast every Fire magic spell in the book, including BE spells like Heat from Hell, Fire Storm, etc.. Give him a Flame Helmet too, and well, he'll hand it right back saying he doesn't even need it

Oh, and Warriors of Muspelheim will make all your 50% FR Oni 100% FR.
If you get the guy with the A1 random, think Aim plus anything. I like it with Bane Fire, a very nasty spell if it can be cast with any accuracy! Late in the game, with a Death booster, the niche yet powerful spells Wailing Winds and Wind of Death become available. Oh, I almost forgot, with Earth Power or a booster, they can also cast Rain of Stones, a cheap, brutal spell for Yomi to use with its robust demon units (keep the Bakemono and Sorcerers at home for this one).
The E3 guys? Boots get you to E4, Earth Power to E5. And now you can cast every Earth spell too! All those cool buffs - for starters though, think End of Weakness, and your Oni soldiers now have, well, average protection, but still with only an Encumbrance of 1. Blade Wind is nice, but Magma Eruption is better. Petrify, Weapons of Sharpness, and finally, the Army spells.
Oh, and finally, the guys with D4. That's right, Yomi has access to natural D4 mages, so D6 with Staff and Helmet (or if you're super lucky, you just might get a D5 10% random that will get you to D7 without Artifacts or empowerment - I got two of those in my last MP game, used 'em as cheap Tartarian factories!). Darkness is a given (even Bakemono have 50% Darkvision). Judicious use of Shadow Blast can be powerful. Drain Life and Disintegrate for enemy Thugs/SCs. Fear/Terror, Cloud of Death, Plague, etc. etc..
Oh, your E3 Dai-Oni can forge Dwarven Hammers immediately. You should eventually have a lot of them floating around. Site search like mad, get those gems flowing in, and forge away!