Fog can have different aspects. Ditch the elemental purity and it can be corrosive (acid fog, or at the very least rusting), it can be poisonous or even deadly - perhaps the fog opens a connection to elsewhere, allowing things from beyond to enter, but only the fog.
Fog could be a lifesaver in the desert - it blocks some of the suns rays and cools. Deadly on the cold north seas where it freezes to every rope, sail and board.
1. Captured magic creatures which glow - from enhanced fireflies, elementals, etc. I think using crystal spheres with glowing spirits trapped within appropriate for evil lairs anywhere. They can even be broken to release reinforcements.
2. Fragments of pure Elemental Fire can be used perhaps located very high on spires similar to the lights in larger parking lots. Being quite bright and covering a large area, you would not need a lot of them. Since the Elemental Fire would be valuable to many spellcasters, they would need to be protected against theft.
3. Bagdad Batteries can be used along with primative light bulbs to provide lighting much as we do today, with only minimal anacronism :) There would be a whole guild devoted to the operation, refueling and maintenace of the system. Go to Comment
Definately a good set of rules, though I am less enamoured with the Know The Rules rule. I would replace it with Know Enough of the Rules and Know Where to Find the rest. Of course, this depends on the type of gaming you do and the type of players... Go to Comment