Well the first thing I would do is remove some powers that are not 100% necessary, or tied in with his demonic powers at the core. Meaning powers like nature, (nature is usually known to be good unless your poison Ivy, ) water, (demons are known to be hot), and most defiantly remove light attacks (Demons are supposed to be the opposite of this). If I were you I would remove most of his abilities and make a few signature ones, (with weaknesses) that he is known for. Sort of like with Arnzarel, he has a few demonic powers and knows a few spells.However, knowing the weakness of each spell and power can actually be beneficial to him since he knows his limits.
Also I would personally try to stay away from giving him a super form unless it is absolutely necessary. In which I would give a very special condition for him to obtain this form, (and please no chaos emeralds.)
Finally I might advise a species change, make him something not common. (Yes, I know I have Grief who is a fox, but I also have demons, Jotunn (giants), dogs, cats, and other characters. Also in terms of personality try to give him a few positive qualities, this is actually essential to good villains as it keeps the audiance interested in them.
As I have said elsewhere, the huge powerset is part of his character design. "Demon" is little more than a species denominator, rather than his actual state, in the same vein as the Celestials that he opposes aren't actually angels. It's more just a way for me to explain why he is so destructive and hungers for control. Basically, it's just a form of hyper-powerful Mobian with possession abilities and omnikinesis. Celestials are hyper-powerful Mobians with omnikinesis and ... well, I'll be honest, never really fleshed out what the second aspect to their background is. The Demon and Celestial names were given to them by the Mobian people, and they just roll with it. Rageik is an integral part of my mythos, kinda hard for me to change him without having to make large changes everywhere else. What I can and will do, however, is actually add the distinction that he is not a true Demon such as the ones you work with, and trim some of the extraneous powers that he doesn't use, such as the creation of shadow beasts.
The "Transformation" is simply a limit release, like Shadow removing his inhibitor rings. It lasts for up to ten minutes, focuses entirely on specific aspects of his power set, and actually removes power types that he rarely uses. What it doesn't do is make him much stronger, it just focuses his abilities in a different way, creating new weaknesses and altering old ones. Again, I need to make that more clear, thank you for highlighting that.
Species change - Again, Rageik is a central character in my mythos. He's a shapeshifter at his core, but his natural, preferred form is that of a hedgehog. I do have plenty of other races in my character selections, and he has been known to take on other forms. This is mostly going back to his original RP background, and before that, to the old sprite sheets I have and his appearance in a handful of Flash movies. Am I above changing his race temporarily in roleplays? Not at all. In a few off-site roleplays he spent prolonged periods of time as a cat, guinea pig and at one point a bear.
The personality area is the area I'm already working on. Rageik's personality, especially in recent months, has evolved beyond that dark, broody piece of crap. He still has the same goals, but I noticed a few factors in his history. For one, he doesn't hesitate to offer genetic material to save lives. He's protective of his people. And, most importantly, he's reasonable and capable of talking through issues, rather than fighting over them. Sure, he's happy to sleep around. He's brutal to those who stand against him. But, at the same time, he's a family man, and due to the hard experiences in his childhood holds his family as more important than anything else. He has a tender, romanticized side as a nice duology.
So, for your sake, have a TL;DR.
1. Not a traditional demon, more of a Mobian subrace known as one.
2. Power set will be trimmed to some extent, but he will retain all his elemental powers.
3. Weaknesses will be further defined.
4. "Transformations" are focuses of power, rather than true increases. Alter weakness and powersets accordingly.
5. Species changes happen, but are typically temporary to keep him in line with original mythos, as well as his powerset.
6. Personality is already being rewritten, to serve as the more family-oriented and caring companion to his wife, who is stored in my userspace while I work on her.
It's your decision. I normally think of the "strength level" evolution requirements as one of three things - physical (strength, speed), energy (elemental strength) or combat experience. So, basically, it's your choice how you plan to have him evolve, and what kind of effects it will have on him.