The Lucifer and stuff in hell was always my favorite throughout the series. I even loved the Mike Carry Lucifer series where I think for the first half of the run, he was almost out Gaiman-ing Gaiman. Another great series you two could go through. Swamp Thing first though.
I don't think it would be incorrect to say that I lot of people (and by people, I mean all the denizens of the universe) witnesses Lucifer's fall from Heaven. If we go by other such example, the precession of the wake, Lucifer's battle with the Tarot, etc. They all literally played out across the heavens/sky where they could be witnessed.
I also don’t think you interpreted Choronzon’s line correctly. He says, “As the challenged, I choose the battlefield. I assert reality.” I don’t think that is meant to be read as reality is the battlefield he has chosen and there are other planes of existance that I didn’t. I think it is meant to read as, “I get to choose the battlefield so I get to be the one to assert what reality is… and I am going to make reality be a cheesy nightclub.”
I want to talk about Lucifer’s parting words as Dream walks away, but it is in light of what happens at the beginning of Season of Mists, so I’ll have to wait.
We are counting down the days until we get to Season of Mists. That was my first Sandman, which I read when Brent had received the gorgeous leather-bound edition as a gift.
That's an interesting interpretation of Choronzon's line. That certainly could be the case -- in fact, it's probably more likely than mine -- but I always thought he was explaining something about the rules of the challenge. We'll have to revisit that in the future.