1) Yep, your fuel should last you for quite a lot of regular gameplay - as you note, however, the catch is that you also need light for things like opening doors and reading books, and these are much more time-consuming activities.
2) Several monsters have specific item sets that they themselves use(which is why when you kill one of the undead types, you'll often find that their equipment has been damaged to some extent). Additionally, every monster has a certain random chance to drop an item or items. This chance scales with the monster, so it's quite rare to find an item, especially one of Uncommon or higher rarity, from something like a rat, but it is allowed to happen. Not entirely realistic, of course, but I wanted to offer a method of loot generation other than the vault rooms, in case a player happens to be unlucky with those in a particular run.
3) Yes, the khopesh does quite alot of damage - the balance, if it can be called such, of the game in its current state relies on the fact that the player can generally kill monsters very quickly, even the dangerous ones like the Viridian Aura you found(if you had let it hit you, you'd have been very unhappy, lol). So with good positioning and patience, you can avoid damage - with bad, you'll end up taking quite alot. The counter to this is the Sanity mechanic, which cannot be avoided at all (although Tormuse suggested an interesting method of intentionally blind-fighting sanity drainers... in theory this will work, but it's not without its own risks...)
4) Yes, apparently I haven't worked all the bugs out of my lighting engine. I believe I'll have to overhaul it compeltely - currently it runs in the background constantly, so there are times when the light map has been cleared out at the exact wrong time, and a check will show a tile is unlit because of this. I'll need to make it work in such a way that it only updates the maps it uses when something changes, and then simulate things like flickering lights and sanity effects separately, because currently they rely on the continuous operation of the lighting system. This will be quite a large project, and will no doubt break lots of things, so I'm hesitant to begin it until I can block out enough time to deal with it *and* the inevitable bugs which will result all in a single go.
I'm glad you like the reagent system. As far as finding more, that will definitely be the case for the reagents you'll need to cast spells from the dungeon books, but the starting book, like all other starting items is unique to the player at the start of the game and cannot be replaced in dungeon - and so is the primary reagent it uses. As such, you'll need to make careful decisions about how to use your starting supply. Of course, as one of the spells suggests, there may be a way to acquire more... but you'll have to discover the conditions under which that spell functions, and save enough of your mercury to be able to cast it when the conditions are met.
