[X] Eat YOU? Foolish Oni, it will be MIO that does the eating here!
[X] Draw in your chakra shroud around you... GO WILD!
-[X] If it seems like you're losing the fight... then retreat with a Kawarimi
I am worried that made our demonic arm's effectiveness by diluting it and i'm worried about having lost it's irreplaceable knowledge and still having mental contamination.
Its knowledge of the world seems to boil down to "MEAT! OBEY! SUFFER! FEED! OBEY!" and it showed no inclination to do anything other than eat us, even when we were killing it one inch at a time. I rather doubt it would have ever been a font of wisdom and information on our surroundings. Likewise, I don't think it was some unspeakably powerful uberdemon who could have kicked this Oni's ass for us - it seemed like a lower-middle-rank parasite demon that needed a human host to survive.
Wasn't there a thing in Japanese mythology where dozens of demons are thrown in a crucible, each consuming the power of the others until only one is left? If we're going to survive Tobi upon returning, we kind of need all the power we can get, even if it makes it kinda hard to fit in back home.
The poison bug jar - it's a bit of Japanese folklore where magicians would, supposedly, place certain spells upon an earthen jar or pot, fill it with poisonous insects, rats, and other unpleasant creatures, seal the top, and then bury it for a lunar month. Supposedly, over the course of the lunar month the various creatures inside would fight and kill one another for dominance or our of hunger - and the spell on the jar would cause the flesh and spirit of each creature that fell to merge with its killer's; by the end of the month, the vermin that went in originally would have all been fused together into a hideous demonic "familiar", which could then be commanded by the magician once he let it out of the jar.
Inuyasha, in one of its moments of actually being good, had the main villain apply the principle of the poison bug jar to a hollowed-out mountain he filled with demons, gradually giving rise to a single uber-mega-hyperdemon as they all killed each other and the losers were absorbed by the victors. The payoff was kind of garbage, but at least it was a neat application of ideas from folklore.
Regarding the rest of your post, I'd say we should at least try feasting on some of the lesser demons around here, just in case we can grow stronger from it. Optimally, we eventually get strong enough to beat this POS oni, then parlay with the Gumo-Hime for it to send us back to the living world in exchange for sending it mortals to feast on/rape/whatever and spreading its influence in the mortal world.
