I wouldn't be surprised if someone is able to shoot this down, but this could be the extent of my imagination.
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First of all, the island that rose to the heavens could be considered as Riviera. Even though it was smaller in YU when you were on it - but use your imagination here.
Ok, now, going with the 'bad' ending in YU, Marietta was supposedly killed by Yggdra and her army and Ragnarok had begun. The gods, startled by the strength of the Royal Army, consider them demons - for their inhuman ability to challenge the gods.
The war rages on, with no side seeing victory nearby in the future. This leads to the Gods creation of the Grim Angels - leading to the Gods destruction and their hand-down of power to the Seven Magi (let's consider them as a council before the Gods' deaths) - but even then, the Grim Angels alone are not able to fully turn the tide of the war. They are, however, able to push the Royal Army back to the island, back on Riviera, and keep the fight there.
The Seven Magi, seeing this as their only opportunity, send Riviera back down to Earth, yet not all the way.
The island, now in the borderline of heaven and Earth is the new battleground for the bloody Ragnarok. The Grim Angels are successful, and finally deal a heavy blow to the Royal Army. Though it is not enough for the Seven Magi, as they foolishly (insert powerful attack - something like an Ankh for example -) and destroy every living creature: Grim Angels and Royal Army alike on the island of Riviera.
Devastated by the amount of damage the war had cost, the Seven Magi wished to learn from the Gods mistake, and hope to prevent something like this would never happen again. So as their first act of supremacy, the Magi (and this is where it gets even crazier) destroy every living being on Earth and create the Sprites - the human equivalents - on Riviera. This way, the Magi could monitor the Sprites and form them into being the Gods before them had intentionally wanted before reforming Earth. Yet something had been miscalculated. The essence of the dead Grim Angels (forgot what they were called >.<) had seeped into the soils of Riviera. The first several hundred years go by unnoticed, but soon, changes begin to occur. Sprites are beginning to deform from random contacts of the essences of the Grim Angels that had fused to the floating island.
The rise of demons...
This goes unnoticed by the angels up in Heaven.
Now Hades, after the destruction of the humans on Earth, soon discovers Riviera, and make his home deep within the floating isle, shielded by the mystical powers of the deceased Grim Angels, the Magi don't suspect a thing. Hades is able to control the newly formed demons by creating Greater Demons - Accursed. This is where the revival of Marietta comes to play, as she was killed on the island. Though still controlled by Hades, she still keeps her faith by declaring she is a fallen angel, yet has no power to stand up against the powerful Hades and (let's just guess she's controlled like a puppet.)
I guess you could call that a sad ending in YU terms. I don't remember how everything happened word for word, so pick it apart as harshly as you want to. >.<
But you know what...
/bubble
/hearth
Hahahahaha!!