Ogre Battle 34: Look! Up in the Sky!

So during our last stage, you might remember, we found a Chaos Gate.

Call me crazy, but I think it might have something to do with the appearance of this floating island! We're going to check that out, but first I have to do some housekeeping. Our army's getting kind of bloated, and we need to make some changes.
First up, we get rid of all the very low-level characters and critters sitting in reserve. It's way too late in the game to bust out a Level 2 Fighter. Second, we do dismantle the second Mermaid unit- Cecilia did okay for herself, but we don't need two of these again anytime soon. And finally I ponder dismantling Ellis' unit. I'm hesitating because they did okay for a while, but they're all level 6 now, and we're fighting things in the teens. Bad position to be in. For now I settle for redistributing their items to our more effective units, but I don't foresee them doing any better anytime soon. But we've lightened our load, so onto the floating island of Muspelm!

Small stage, yes? And the shop town, of course, is dead center between our castle and theirs. Now for the bad news:

All that blue around the landmasses on the outsides? That ain't water.