"... an undercover investigation within a society that has little problem seeing through most magical disguises ..."
I think the adventure is fine, although I agree that the idea that the Drow can easily pierce most disguises is perhaps I think overblown. After all, the drow do not appear to be concerned that the party members have an accent, are equipped with surface dweller equipment, and are walking around covered by the faces of slain neighbors. In a small city, where a typical dark elf has lived for centuries, the idea that slain dark elves would not be recognized when they returned strains credibility (on the plus side, most of their buddies were also slain or have departed from the city; furthermore nobody may care that they have returned and joined another house -- but nobody caring is different from nobody recognizing). Can "true seeing" see through most magic? Absolutely. Is detect magic used a lot by drow casters? yes. Do the PCs radiate strong necromancy (and either moderate or strong abjuration for the spell resistance)? Almost certainly. Yet the Drow do not terminate the party of PCs for having a strong necromancy spell on them. It is possible that the drow might overlook other auras.
While there may be epic level demon lords in the city, the demon lords probably have better things to do than cast true seeing looking for spies. While many divine casters may desire the ability to see through lies in a city of liars, it is unlikely that divine casters would receive truth spells from deities known for encouraging lies.