Quote from Kiterosma
Yes, he does in fact spawn underground, however you are less likely to see him due to your limited range of sight. One question for you: have you been finding redstone torches underground?
Also, I don't think I want to make it easier for him to send you to the nether, simply because I intend it to be a punishment for staring at him. I want to make it that once he sends you to the nether, it will be a bit harder to get out than just going back in the portal.
I like your suggestions, I was actually planning on similar behaviors to that. As for the sign suggestions thank you very much!
Ah, I understand what you mean by that. And no, he hasn't left torches, but he did leave signs in deeper areas of the cave before I arrived there. Scary.
And I just noticed, him placing a sign threatening your pet if you have one would require compatibility with those mods that offer that feature. I forgot pets aren't a part of Minecraft originally.