Chapter 370 is most likely one big tease... On the next chapter we will see that everyone is okay and they probably have an afro.
I wouldn't be surprised if some of them end up seriously injured and spend the rest of the arc in bed wrapped in bandages. That's always a strong motivator for Natsu and co. to overcome their enemies. That poor building, though. How many times will it have been rebuilt now?
I'm more interested in the humans being changed into demons. Mira should be interesting, since her powers let her transform into demons in the first place. I bet that will make her immune to the process and whatever they change her into will just become a new demon form she can use.