Haha, nice.
How do you deal with the lighting problem?
The best solution looks like to be the fairy bell.. not perfect but still better than those mining hat (preventing to use armor helmets), orb of light (almost useless), torches and so on.
Ah! There was another potion. Hunter's potion or something like this. It lights up enemies. So, I didn't use any additional light sources.
Also, almost constant rain of stars lights everything around a little.
I dug vertical tunnel without obstacles from surface right to underworld. Fall time is 33 seconds! In a small world!
If you drop something there, you will find it at the bottom. So, Terraria actually tracks things like this.
Btw, you know that it is impossible to flood the underworld? The water is evaporating mid air.