Earlier quoted context omitted.
It should more properly be written as dæmon. The æ ("ash") character is usually pronounced more like "ee", as in encyclopædia. I've never heard anyone say "encycloPAYdia" :-)
Fascinating! This is why I stick with nice, clean structural linguistics, this applied stuff gets sticky. I just confirmed on Youtube that the (some?) British people do indeed pronounce "Aesthetic" as "ah-stet-ic" not "ee-stet-ic", and upon diving a bit, it seems that the rule is "don't ask for a rule, you fool! It's 'e' now except for when it isn't." Thanks for the interesting tidbit! The letter æ was used in Old En…
The Great Vowel Shift indeed makes written English much more confusing than it perhaps should be. English is already a messy hodge-podge of a language, then our writing system started to get standardised (or standardized, if you're American!) right as pronunciation started to change, leading to the written version of words suddenly no longer being anything like the pronunciation.