GR had to present their daemons distinct from the TSR/WotC yugoloths because it's closed IP. That's the same issue that I've come up against when designing the daemons of Abbadon for the Paizo/Pathfinder cosmology. Some thematic similarities if you assume an NE alignment, but they need to occupy a distinct niche in the cosmology to stand on their own versus the other fiends without wandering into the same way the TSR/WotC yugoloths accomplished that.
I wasn't ever able to snag a print copy of the various GR fiend books, so my knowledge is pretty second hand on their specific take. However the GR daemons seem focused on corrupting mortals quite a bit, with some focus on specific sins. Such an approach probably makes them a tad more accessable for use in a non-planar focused game, while the 1e/2e/3e 'loths had very little interest and involvement on the material plane so much easier for a game based on the planes rather than the prime material.
That said, the TSR/WotC yugoloths were never really focused on being mercenaries. WotC never bothered to develop them to any extent in 3e, and presented a pretty shallow depiction of the race compared to the wealth of 2e material. It's a shame, because as I've heard, apparently they were originally planned to be in the 3e core MM, but were cut for page space reasons and worries of having too many planar monsters. The original intent was to save them for a deeper presentation in subsequent books, but this design notion was either changed by later additions to the design team, or simply not known to later designers. I got no insight on which might have been the case.
As for the mercenary activity, that was a front of sorts to keep the Blood War active and allow them leverage in slowly guiding its course. Their lower castes were entirely expendable as far as the greater yugoloths were concerned, and the most used ones - the mezzoloths - were a special case. Any mezzoloth that died immediately spawned a new one at one of the three great yugoloth towers in the Waste (Khin-Oin), Gehenna (Tower Arcane), or Carceri (Tower of Incarnate Pain). In the end, the 'loths simply wanted to explore themselves and the nature of Evil itself, with the Blood War as one massive, genocidal experiment. To that end, the obyriths (the original fiends in the Abyss that would later create the tanar'ri) were the creations of either the yugoloths or the 'loths own primordial creators, the baernaloths. Likewise for the first fiends of the 9 Hells, except things didn't go as planned, and they were replaced by the baatezu (a fallen servitor race to the primordial and nameless LN outsiders).
The TSR/WotC yugoloths (unlike the demons/tanar'ri and devils/baatezu) had at best, disdain for mortal souls. The 'loths existed prior to mortal life itself, and viewed mortal petitioners and larvae as commodities and a pollution of their spiritual purity on the planes. Mortals on the prime material were often just not a concern for the 'loths, except when it came to their use (or abuse) in screwing with deities, which the 'loths -for various reasons known or speculated- had an abject hatred towards.
Best sources on the TSR/WotC 'loths:
Faces of Evil: The Fiends
Hellbound: The Blood War
Planes of Conflict
And for a personal plug here on my current project:
The daemons in the Pathfinder cosmology, rather than being the oldest of the fiends like the TSR/WotC 'loths are among the youngest. They have an intimate, if twisted relationship with mortal souls, because they didn't exist till the first souls reached the outer planes and became corrupted by evil, escaping the notice and influence of either of the other fiendish races or gods.
The daemons of the Paizo'verse represent true death and the oblivion of the soul, springing from mortality, like expressions of a self-loathing suicidal urge by the cosmos itself. They have no particular view on gods, but they do have a specific and extreme loathing towards mortal life, seeking as a general racial goal to snuff it out entirely and bring about the death of the cosmos itself. And as such, they've mucked around on the prime material at times in a major way (pending editorial revue
), and have a vested interest in soul collection. Like the GR take on daemons, they have a particular thematic niche that makes it easier to approach their use as antagonists in non-planar games just as easily as planar ones. Of course the exact reasons for this, and their own opinions on just what they truly are, why they pursue this, and where they truly come from isn't a uniform tradition.
That's a tiny little primer on them, and there's more in the Pathfinder campaign setting book, and much more on the way in 2009 in the cosmology book. And Colin McComb is writing a planar module which will be featuring Abbadon and its fiends during one segment of several.
