I like that you are kind of kicking it up a notch, a la Dresden (whom I love). Even though the first book was a fairly big "event" with Annie B and the Shakey Stick, it still felt fairly "contained" as did the Coyote stuff. Now we have a clear indication that bigger shit is going on, and King Henry is going to be pivotal in how it turns out, so that really makes me look forward to the rest of the story. Not to mention that it seems as if he has a nemesis now with significantly more power.
In particular I'm intrigued by your opening up of other worlds/realms in what was a pretty solidly grounded "real world" book. I mean, clearly we have the Mancy which takes it out of the true real world, but you know what I mean. I think you did a great job of introducing it. This is particularly relevant to me because the story I've always wanted to write involves a kind of "genre shift" if you will, somewhat similar to yours. My biggest fear would be losing the audience at that point. I'm probably not explaining it well enough, but you did a great job of integrating the Mancy into the mundane world of Fresno, Lake Tahoe, etc. so that it was easy to forget you were reading a fantasy book, and now you stepped up the fantasy element quite a bit with black elves, dragons, elemental planes, etc. Did you worry about how readers might respond to that? Was that always the plan, or did it grow as you realized you had a setting and characters worth building upon?
I also want to compliment you on your foreshadowing via characterization. I knew the moment that "Val" pulled him into the science room at the dance and said, "Do you like this body?" that it was Isabel. I'm not saying that in a bad way, but a good way, because anyone paying attention could spot it but many others would probably pass over it without thinking, and when they go back and look it will make complete sense. And the way you played out the scene it was fairly obvious that King Henry wasn't thinking clearly enough to spot that obvious giveaway either, so it made sense that he missed it.
Along those lines, thanks for making Val a cool chick, and even explaining away her craziness. I told you I was looking forward to seeing her in action before this book came out just from the way you had King Henry describe her, and I wasn't disappointed at all. You portrayed her perfectly as the chick that any guy would fall for, but still fairly normal. I will give you this one warning, however. I understand if she's not always a prominent character in the future, but if you take her away from King Henry due to some retarded chick-TV/book-drama just to create tension when we all know they belong together, I will come for you. I live in Sacramento and went to college in San Luis Obispo which gives me enough familiarity with Fresno. I have a certain set of skills (usually involving spoiled milk), and if you mess with Valentine Ward in any way, I will find you, and I will milk you.