S. R. Faruqi:

In this verse he's mingled mythological reality with the reality of passion in such a way that it's reached the height of 'theme-creation'. The meaning of dev is 'a powerful creature made of fire', and also 'devil'. The fire of passion burned Ravan to ashes. The expression of this theme entirely fulfills the claims of both 'affinity' and 'metaphor'. If Ravan had not loved Sita-ji, then he would not have been destined to defeat.

Then, Hanuman-ji's setting fire to Lanka [in the Ramayana], and the custom of burning an effigy of Ravan on Dasahra-- keep these two things in view as well. Ravan's house was in water, because Lanka is an island. The meaningfulness of 'burned to death' too is subtle/enjoyable.

In short, no matter how we look at it, this verse is an example of masterful skill. Keep in mind too that he has called Ravan a martyr to passion, but he's also called him a 'demon'. And he's also included the point that whether demon, or creature of fire, or human, passion doesn't spare anyone. How well Shaikh Attar has said [in Persian],

'I have made, and keep making, the ragged robe into a sacred-thread,
I have felt, and keep feeling, passion even more strongly than that.'

Qa'im too has versified the theme of Lanka, but entirely without any color:

dil miraa tum ko to la;Nkaa hai dasahre kii butaa;N
fat;h hai saal bhar us kii jo use luu;Tegaa

[to you, my heart is Lanka on Dasahra, oh idol
the one who will ravage it, will have victory for the whole year]

FWP:

SETS
MOTIFS
NAMES == LANKA; RAVAN
TERMS == 'THEME-CREATION'

Through a quirk of Indo-European linguistic and folkloric history, the same word, diiv in Persian and deva in Sanskrit, came to mean an evil supernatural entity in Iran, and a good supernatural entity in India. In Urdu, the pronunciation of diiv as dev is common, which might sometimes cause it to be confused with the modern Hindi dev , 'god' (as in Mahadev, a title of Shiva's). But in the present case, no reference to the Indic-side meaning is intended, for nobody considers Ravan a dev or deva in the Hindu sense of 'god'.

In the ghazal world, the pious Brahman (with his sacred thread, in his idol-temple) receives almost entirely favorable treatment, in accordance with the transgressive, antinomian, Sufistic attitudes of the genre (Mir particularly disdains and reviles the Shaikh). But to bring in a dangerous, demonic (though also often somewhat romanticized) villain like Ravan, and identify him with the honorable company of passionate martyrs for love, is an idea so original-- and so doubly transgressive-- that it's not surprising that SRF credits Mir with masterful 'theme-creation'.

Why does the verse ascribe to Ravan a la;Nkaa saa ghar , a 'house like Lanka', when in fact his house was Lanka itself? Perhaps for rhetorical effect, as in 'How can you complain, when you have a house like this to live in?'. Thus 'a house like Lanka' feels especially emphatic and resonant.