The spell card rules were "officialized" after the "vampire incident" by the "the shrine maiden", and "it's said" the very first time they were put into use was during EoSD.
This means that likely, "the shrine maiden" was Reimu. After all, if it was one of Reimu's ancestors, then why on earth was it not used until EoSD?
This is, of course, assuming that Perfect Memento's translation is correct. This also assumes that "it's said" is correct. There are hints and pieces here and there that a lot of the "it's said" moments in Perfect Memento are things that Yukari told Akyu, and Yukari could very well be lying. And if it's not Yukari who is the "it's" in "it's said" in this case, then whoever the "it's" is could be wrong as well.
...assuming that the Japanese language actually differentiates "it's said", etc., and that's not just flower translation text.
I'm pretty sure the "shrine maiden" is Reimu, tho. Perfect Memento is the first edition of the Gensokyo Chronicles for Gensokyo's golden age, and it's implied that its the spell card rules that brought about that golden age according to PCB's prologue (unreliable narrator-ish as it officially is stated to be by ZUN) because "anyone can duel each other whenever they want" (or whatever it was). And it's hard to imagine WHY Akyu would include "The Vampire Incident" in Reimu's section if Reimu wasn't involved, somehow (ignoring the mistranslation that Reimu was the one who beat the vampire(s). It was "powerful youkai" who did in the Japanese text)
That said, danmaku play and the idea of dueling using rules was around long before the spell card rules. From Yuka's Perfect Memento section:
"However, when ones with power clash, both sides are aware that it can't possibly be settled.
To counter this, before the battle, rules are decided and a formal battle often takes place.
By fighting with these rules, even if one could continue after losing, they must admit their loss.
Once that is done, the other side will not pursue it further.
That is the wisdom of youkai who have lived long."
and
"If you come across this youkai battling with someone else, do not get yourself involved.
However, these fights are based on certain rules, so as long as you do not disturb the fight, she'll be polite.
If you can keep enough distance from the fight, it's also a good idea to watch the show.
Battles of non-humans are full of breathtaking beauty."
As you can see, the above descriptions match the spirit of the spell card rules. They are rules decided on before the fight, and you have to admit defeat at the end even if you can keep going. The latter is stated in the draft of the spell card rules in Perfect Memento.
Those quotes from Yuka's PM section do not state that the battles were done with danmaku. However, the latter one does state that the battles are beautiful, and beauty is one of the first things mentioned in the original draft of the spell card rules. And given that there likely is not much beauty in Yuka's other choice of battle (pounding you to oblivion with her fists, I imagine), these youkai battles with pre-set rules were thus likely done with danmaku.
So it is wholly possible for Byakuren to be able to participate in some form of danmaku duel, although it's a bit harder to swallow or explain how she knew of spell cards SPECIFICALLY.
The spell card rules themselves are stated to be written on a "youkai" contract. Given that they were written in response to the vampire incident, it is a reasonable assumption that that is a devil's contract, and thus unbreakable and quite mandatory. It's not 100% certain that this is the case, but again, it's a reasonable assumption, I think.
And yes, "the shrine maiden" was the one that officialize them, but Akyu believes the original rules were actually written by a youkai (Yukari being the most likely candidate since she wrote a book on vampire contracts, espouses the "beauty and thought" described in the original spell card draft, is known to make allowances for weaker opponents, and is always doing string pulling like that for Gensokyo, although given Perfect Memento's details of duels in Yuka's section, Yuka is also a possibility. The "ultimate magic" that Yuka received from the PC98 games is unknown but ZUN says it's "danmaku related")
I don't think the Oni were banished with the other Youkai underground.
Yea, one of the conversations in SA (I think it was Nitori to Marisa) has Nitori tell Marisa that the underground consists both of youkai who were banished there, and those who came of their own accord. Oni are definately the latter (as stated in Perfect Memento. Yuugi herself describes it as a deal they made with the youkai sages)
3) Were Kaguya and Eirin on the Moon or the Earth during the Lunar War? Were they even alive?
Kaguya and Eirin were exiled to the moon around 1,300 years ago (it was definately before 1,000 years ago, as Toyohime mentions in CiLR that she was gone by the time that fisherman was sent back to earth, which was before them)
The lunar war was 1,000 years ago. So yea, Kaguya and Eirin were gone by then.
After the Lunar War, now knowing about Yukari's ability, Eirin set up a trap for Yukari, but she had to do this from Earth. It is implied that Eirin had to send the Watatsuki sisters a letter from earth in order to set up the trap that would later trap Yukari later in SSiB (Toyohime says it's been more than 1,000 years since they last received a letter from Eirin, and reveals later that the trap was set by Eirin, so you can put two and two together and...).
...First of all, the Hakureis shouldn't get defeated because if in case the Hakureis should die, Gensoukyou falls apart since the Hakureis are the one along with Yukari and Ran that sustain the boarder.
I actually suspect this is a pseudo lie perpetrated by Yukari. Aya makes it clear in Silent Sinner in Blue that if the Hakurei Shrine maiden were to suddenly dissappear, they can just get a new one. I doubt Aya knows HOW they'll get a new one, but she overall shows no worry whatsoever about the fact that Reimu has gone to the moon and hasn't returned after an entire month+, and might be gone forever. (The exact quote is along the lines of "If she doesn't come back, we're going to have to find a new Shrine Maiden soon.")
I point the finger at Yukari because it's hard to see who else could be spreading the lie that the outside world Hakurei Shrine is deserted. Yukari's ability to travel to the outside really makes her the only authortiy on that (both Aya in BAiJR and Akyu in PM state that the shrine is SUPPOSEDLY deserted in the outside world. Or in Akyu's case, "It is said"). However, CoLA (the chapter where Rinnosuke first meets Yukari) implies that THIS IS A LIE. Rinnosuke visits a shrine on the outside world (which is probably the Hakurei Shrine... it's doubtful he was able to dream himself that far from Gensokyo) and it is actually bustling enough that he hears a lot of noise. Yukari quickly boots him out of there and back into Gensokyo fast, almost as if she's trying to hide something. (this is in the chapter where Rinnosuke first meets Yukari). She then gives Rinnosuke an EXTREMELY suspicious and strange explanation about how it was really just a musical device that made him dream wierd things (probably a lie attempting to get Rinnosuke to just forget about the whole thing, which he ends up doing)
So I think Yukari is actually lying to everyone, claiming the shrine is deserted and thus everyone must not kill the Hakurei Shrine maiden. The truth, however, is that whenever the current shrine maiden expires (via whatever means), Yukari probably just... spirits in a new one from the not-deserted Hakurei Shrine on the outside world. It's hard to imagine why else Aya (who's over 1,000 years old, IIRC) would be so casual about simply getting a new shrine maiden (though Aya herself doesn't know the details, probably, considering that even she's led to believe that the outside shrine is deserted)
As for why she'd lie about it, I'm not sure, but if I had to guess, I'd say she's lying for the shrine maiden's own protection. Imagine how much danger the shrine maiden's life would be in if youkai realized she was quite expendable.
This also conveniently explains why we never hear about Reimu's parents (of course, you could argue that ZUN simply ignores parents, but he didn't ignore Marisa's parents, at least).
ZUN himself refers to himself as Knnosuke Hakurei (Kinnosuke means "Head Priest"), and I think it was even stated in the music section of Bohemian Archive (or somewhere) that he's Kinnosuke Hakurei of the outside world's Hakurei Shrine. ....obviously, we can't take that TOO seriously, but still....