There are 36 encounters here, and a distressing number of them are exactly the same as depth 4 but with d3 instead of solo, or d4+1 instead of d3.
Incidentally this sort of design of 'How do we make "Enemy" a bigger challenge? I know! Enemies~!" Is part of why Dark Souls 2 is the worst dark souls.
Anyway, lets try to salvage this. Area wise, we need to think- why didn't the undermen settle in the nice open space up with the cathedral? Well, two reasons- that 'nice open space' is strategically unsound- there's too many weird little tunnels that lead into depths to keep track of them all, and if a ravening horde of monsters appears they'd have no chokepoints to defend. Also, Undermen are all agoraphobic and prefer to live in tight, twisty little little corridors.
So that's what's underneath the cathedral- the 'village' of the undermen, a bunch of tunnels wide enough for two men to walk side by side, but not to fight that way unless they're drilled in formation fighting like a hoplite and have a thrusting weapon. It's like a maze of alleyways, and doors into the small, one-or-two room homes are just stone slabs propped over the carven doorway. This is, after all, the equivalent of the peasant and craftsman district, not the great grand hall of the Underking.
Skullmoth lanterns hang about, illuminating the streets. Some buildings have iron signs hanging over them, depicting the line of work the inhabitants are in, and these building rarely have doors, as they wish to encourage people to come inside for business. They deal in blood sacrifices and gold and go to communion at the church of bloody gold every once in a while. Also, murder and slavery is not a crime, so the denizens down here are polite, tough, and evil.
In anycase, lets start translating this meaningless mix of mindless and merciless monsters into shopkeepers and townsfolk. They all count as 1d3HD combatants, except for slaves who are noncombatants. That's why they're slaves, probably.
- Stonecutter/Sculptor. Rather than a basilisk, we'll have a burly fellow armed with hammer and chisel. He is a rich man and has many slaves. He likes strange bodytypes and has his slaves pose for his art, and his home has many unfinished statues.
- Tanner/Tailor- Rather than Barghest, Bugbears, d3 celestial lions, and a cloaker, let's have a family of people well trained in turning beast hides into clothing. If the PC's want to turn monsters into clothes, this large and boisterous family has no equal. There are 4 sons and 1 daughter, and they all have swanky leather jackets. They sold their parents into slavery once they came of age, which made the parents both angry and proud.
- Bat Man- Rather than Bearded Devil and Dire Bats, lets have an old and shrewd bat-farmer. His colony lives in the big cave of the cathedral, but he keeps sick bats in his home to wrap them in little bat blankets and nurse them back to health. He patrols the streets hawking his mushroom batwing kabobs. He is an excellent climber and has lots of rope, spun from human hair. He is supernaturally skilled with the lasso, able to wrangle a flying bat, and might act as a grumpy master for those willing to learn his art.
- Brothel of Night's Desire- Drow and a doppelganger? For deception, we'll have a Illusionist Madame who tailors her (very plain) prostitutes to look like anything you can describe, for a bargain price of 5 gold! If you piss them off you may have to deal with illusion-concealed killer hookers infiltrating the party. The madame won't share her spell for anything less than a fortune large enough to retire on.
- Silkweaver- Ettercap and spiders- well almost. This is actually just a giant spider that provides silk to the townsfolk in exchange for slaves to eat. Silkweaver is very displeased with her errant daughter who has run off to be a playwright instead of sticking around to either take up the family trade, or be eaten. Deals in gold to buy slaves. When business is booming, she might have some living slaves kept wrapped up for later snacks. Lives in a regular underhouse.
- Lawyer/Arbiter- Rather than a genie, lets have the reason that retrieval squad has a bottled genie in the first place. Even in a town of evil undermen who consort with monsters and murder their own slaves, there is a need for Law. The Arbiter is a cold-eyed man with an excellent grasp of rhetoric, logic, order, and so on, and disputes are taken to him if neither party is willing to just use violence to sort things out. He is invaluable for making deals with demons, djinni, and other sticklers for the letter of the law. His wife can be a green hag (well, just a regular old woman) and his daughter can be the gibbering mouther(or rather, gibberingly insane). It's a strange household- most Underfolk would have just sacrificed their 'defective' daughter and been done with it.
- Smith- Instead of a manticore, we'll have a different type of spikes-thrower- a weaponsmith, purveyor of fine crossbow bolts, crossbows, spears, short swords, and shields. And regular every day stuff, but there's apprentice/slaves for that sort of work. His need for coal is insatiable.
- Brewery- The alcohol down here is really, REALLY strong. It can be used as a molotov cocktail with no special preparation, and unwary drinkers may find themselves becoming falling-down drunk much faster than they expected, leaving them easy prey for slavers, and thieves after their metal gear
- Mayor Carroll's house. Carrol usually wanders about town, and his carven halls are depth 6. There are multiple means of entry to his house via servants entrances, but he doesn't suffer trespassers kindly. The servant's entrances each require different keys, and the main entrance requires the key around Carroll's burly neck.
Random Street Encounters
- Gutter Hydra-Actually a horrible knotted conglomerate of 6 Itava parasites that escaped the corpsetakers and now slithers through the streets looking for a host capable or surviving 6 parasites at once. Unique.
- 1d4+4 Giant Vampire Bats- They sneak about and suck blood from people not protected by skullmoth lights. Killing them earns the ire of the Bat Man.
- 2d4+1 Underfolk. This should be wererats, a werebear, and hellhounds, and ogres, and skum, but I think a pack of people who might be out to get some free surfacedweller slaves or might just be going to church or just shopping fulfills pretty much the same encounter possibilities. Besides, every player I've ever seen has wanted to become a werewhatever anyway so the 'threat' of lycanthropy is no threat at all.
- Undead Streetwalker. Gives mummy rot and is very lonely and clingy, so trying to simply bribe her to go away will pretty much only ensure repeat encounters. Naturally this is in replacement of an actual mummy encounter, but with a hooker with a heart o' gold instead of King Tut. She's probably undead because she was sacrificed, and is missing a few teeth that turned to gold and were removed post-sacrifice. Unique.
- Streetsweeper Ooze- Less hairy and more dangerous than the ones from depth 3, this one fills an alley-street-corridor and advances inexorably, devouring anything in its way. Probably has some coins and weapons from drunken undermen it ate. (This is basically an ochre jelly)
- Vengeful Spirit- Combining phase spider, wraith, and shadow mastiff, this is the incorporeal lifedraining encounter. They can't enter homes, but occasionally stalk the streets for indiscriminate vengeance upon the living. Hosting a parasite renders you invisible to them.
- Mayor Carroll- A hulking man who has performed lots and lots of gold sacrifices to the evil god, and as such despite being 'only' level 4, he has 1000HP. (as opposed to the Troll encounter he is replacing, which would have effectively infinite HP due to regen). Carroll will invite newcomers to dine with him and ask about the state of the surface world, and seek to extract tribute from anyone living up there, which will then go to the Underking after Carroll takes his cut. He will also sacrifice a virgin on the table after dinner and give the players the GP, because that's just good manners. His house is quite large for an underman domicile, and is an adventure location in itself.
- Skullmoths. This is, as usual, a replacement for the inevitable call for snakes, scorpions, and various venomous insects. And also for Vargouilles, which are flying heads that turn you into flying heads, and Skullmoths already have a zombification breeding cycle so that's good enough.
- 5th level human monk NPC. A retired gladiator taken out of the arena, but the arena couldn't be taken out of him. He challenges people for duels for money, an activity sometimes disparagingly referred to as 'mugging.' Could be a replacement character or hired as a hireling if the PC's are sufficiently badass.
- 5th level kobold sorcerer- Rather than a kobold, lets have it be an annoying underteen with a big head who has stumbled into fantabulous magic powers after surviving a spellplague and now has magic runes evidencing on their skin as a rash.