This is awesome.
perhaps we could make it wave based, and because the old ones don't perceive time as we do, the human civilization could age, and attack us from different times periods. cavemen to space men. And maybe the aliens (or something of that ilk) that inherit the earth afterwards.
the emotion manipulation thing is quite amazing, I have a list of psychotic dementia, and the like from D&D I can grab if you wanna have different types of insanities.
as far as having our own units, maybe we could have loyal cultists. And that gives me a neat idea for getting mana or something to use our attacks. maybe we'd get higher max and regeneration for the amount of cultists we have, and we can "buy" them by intruding into the dreams of humans in-between waves.