This is a pretty good realm, so I hate to start this guide off on a bad note. But I must, because this is one of the buggiest, most sloppily-designed levels that I have yet seen, even though it still manages to play well.
Examination of the map and script reveal numerous errors:
Now that we have established that whomever made this map had no clue as to what they were doing, let's talk about how to beat it! You begin on the southern side of one of the largest lava lakes in the underworld. To either side of you are some pockets of mid-level heroes, so you must be careful how far you tunnel when building your basic dungeon.
The first matter to take care of is charging out of your dungeon and claiming the bridge that leads around the southern edge of the lake. When you reach point 1, where some mysterious magic power is bubbling forth from the earth, you will receive the ability to build Bridges. But not only this: by getting to this point quickly, you stop an enormous invasion of tunneller hero parties who would attack your dungeon from the west every few minutes. (Heroes were also supposed to come from the east, but as mentioned above, a scripting error spares you from this.)
In order to claim the Bridge safely, you will need to seize the Portal and then use the Steel Doors with which you were gifted at the start to lock all of your Imps into your dungeon. Pick up one Imp and have him claim along the Bridge while the local hero forces are not looking. Once you are close enough, simply dropping your Imp onto the mysterious magic tile will give you the Bridge and stop the invasion - you do not have to claim all the way to this point.
If you stop the hero invasion in time, which should be simple, you can build your dungeon up to the limits of either cave and all the way north to the lake of lava. In the western crescent-shaped cave are 3 level 5 Samurai, and in the eastern cave are 3 level 4 Monks. However, if you carefully tunnel around the side of the eastern cave against the Impenetrable Rock, you can safely find an unaligned Workshop to claim which comes with its own free level 3 Bile Demon, the only one which will join your ranks in this domain.
Build your rooms large, for in this realm it is possible to create an army of unparalleled might. With the Torture Room, Prison, and Graveyard all available to you at once for the first real time, you are able to exercise any of the basic options for expanding your ranks. This realm teems with heroes, some of which make fine Skeletons, others of which train into fine minions in their own right, and all of which make good fodder for Vampires.
At first you will find that you are attracting nothing but Warlocks. This is fine for the time being, and do not waste time throwing any back out the portal. Make a large Library and use them to finish off your research quickly. As soon as you have the Barracks and Torture Room, you can build these and then throw out all or most of your Warlocks. Orcs and Mistresses will begin streaming into your dungeon in unprecedented numbers. Train your Mistresses to at least level 7, being wary of your gold. Once again your finances are constricted at the beginning of this realm. Build a gigantic Workshop and put all Orcs and Mistresses who are not currently training to work there. Selling Magic Doors will keep you afloat for the time being. There are two fully usable gem tiles in this realm, but both are currently under hero control. Let us rectify this.
Once your troops are ready, snake your Bridges along the sides of the various islands in the lava lake, being careful not to actually connect to any of them. Raise a Call to Arms and drop down all of your trained Mistresses. They will zap the heroes from afar with Lightning. Only a couple of level 6 Priestesses are of concern, for they can fly toward your dungeon at will. North of center, you can find the first of three Increase Level specials ready for the taking.
At point 2 to the east you will find a Prison. However, within dwell five rogue Horned Reapers who have been set free from imprisonment by one of their comrades. Opening up this room will allow them free reign over the lava lake, so leave it sealed for the time being and concentrate on claiming and mining the gems.
At around 34 minutes into the campaign, a party of Fairies will be summoned to the center of the lava lake and will try to attack your dungeon. This will no doubt come unexpectedly, so be wary.
Once you have the gems, build a huge treasure room near the western vein. Enlarge your Training Room and put most of your creatures off of Workshop duty. Open up the Prison, protecting your mining Imps with Guard Posts for the time being, and let the Horned Reapers disperse. After claiming the Prison, lure them back toward it one at a time and use a couple of Dark Mistresses to subdue them. Imprison and convert each, for it is a true mark of glory to possess not one but five Hornies!
As for what you should do with the various heroes you encounter, here are my recommendations:
Dwarves, Archers, Barbarians, and Giants are too weak for you here, Monks and Fairies take too long to train, and Priestesses are annoying. If you capture enough Thieves, you can once again raise an army of Knights by training them, and this will create an interesting compliment to your horde of Horned Reapers.
At any time you can begin an assault upon the hero fortress to the north, but first you should visit points 3 and 4. Inside each of these caves are some moderate hero forces and two Increase Level specials. I recommend saving at least one of these until a good deal of your Thieves are level 10 (if you opt to convert them), because it will save you a lot of time waiting on them to mature into Knights. The cave at point 4 just happens to contain a number of level 8 Thieves awaiting your torture.
Your mentor told you that this fortress was in shambles and that you should tear its walls down. You will find as you go along that many of the walls evaporate as you claim near them, due to having nothing on the other side except lava, water, or unclaimed territory. Dig them down cautiously and claim deep into enemy territory. As you enter certain rooms, hero parties of varying strength may drop in to visit. With Boulder and Lava traps, there is absolutely no reason why your dungeon or your mining Imps should ever be in danger. If you need to stop heroes from rushing toward your dungeon, just sell your Bridges away temporarily. Once you claim suitable territory, build an extra Prison and Graveyard somewhere within so that you can keep this area isolated while still capturing or making other use of the heroes.
Within the fortress at point 5 you can find a Make Safe special, but this is absolutely useless to you. The Dwarves nearby make an excellent group of Skeletons, though, and the Samurai guarding it would be a good compliment to your Mistresses' and Skeletons' wall of Lightning.
When you finally enter the Heart Room, three huge parties of the strongest heroes you have ever seen will drop in, followed shortly by the Lord of the Land and his band of elite Samurai. Fortunately for you, they cannot escape the Heart Room due to a fortuitous pool of lava. Summon your Mistresses, Skeletons, Vampires, Fairies, and Samurai to a nearby room under Call to Arms. Bring them near the Heart Room and let them snipe off most of the heroes within. Beware of the hero Samurai, who also possess their own Lightning spell - if your minions begin to wane, pull them out and let them heal for a while. Protect Creature also works wonders.
Once only the Lord of the Land remains living, turn imprisoning back on and bridge into the Heart Room. Subdue him in a suitably ironic manner by using your converted heroes and Horned Reapers, and take him prisoner. Smash the Hero heart, then torture the Lord until he cries bloody murder. Once again, you have conquered this realm.
(I raised an army of 76 minions in this realm, including 5 Wizards, 2 Barbarians, 6 Monks, 1 Mountain Dwarf, 9 Knights, 2 Priestesses, 3 Giants, 1 Fairy, 3 Samurai, 5 Horned Reapers, 15 Skeletons, 8 Dark Mistresses, 6 Warlocks, 1 Bile Demon, 3 Vampires, and 6 Orcs, with a payday total in excess of 60000 gold. This is the greatest force I have yet controlled in any realm. Since I had not stopped the tunnellers for lack of knowing how at the time, I lead all my minions into a massive final battle to clear out the western half of the realm. Within two minutes nearly a hundred heroes lay slain without the loss of a single one of my minions. This is true glory and should be experienced at least once by every Keeper.)