Greg McCain

   “The best time to plant a tree was 20 years ago. The second best time is now.” – Chinese Proverb

Hi Rufaro
   I would like to suggest that you put the compost pile in with your chickens and not just a few scraps of tomato's the compost will attract bugs and the chickens will eat them. You may never have to buy grain to feed them again. Assuming that's what you are currently doing.

Hi  
It could be that they were saying that for the same reason that you shouldn't plant a tree in your hugel. As your hugel ages it will collapse which could expose roots and/or bury the stem.  
Also this may be 10-20-30 years down the line but you will eventually have to rebuild your hugel and then you would either have to dig that plant up or go around it either way it would be more work.
Generally speaking hugels work best with annul crops where your plants only have to deal with 1 year of collapsing soil instead of a life time. In my opinion.
Good luck with what ever you decide to do tho.

Hi Sam Just wanted to make a few suggestions. You might want to add Black locust trees to your guild.    For your nitrogen fixers and add pomegranate as a fruit tree being it can survive the climate. I think it's admirable that you want to try to do this without irrigation, I think you would be better off with at least drip irrigation or groasis .As long as you plant trees on your swales you would still be benefiting the hydrological cycle as long as you are using less than you are infiltrating. A personal pet peeve of mine is watching permies grow gardens on their swales when it is tree roots that help get water past clay and bedrock (It's a 2 way street) not to mention shade the water from evaporation. THo I can't blame them for wanting to only dig one ditch instead of a ditch and a garden bed.  In any case, Good luck

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I'm Just kind a making an educated guess at this. But Tea tree oil might work. The smell might work as a deterrent and the oil might be toxic enough to kill the larvae as they are layed . Also it would act an antiseptic. Tho I don't think it's a good idea to treat them with it once they have opened a wound.
I base this on the fact that when I washed with tea tree oil soap myself that mosquitos would leave me alone and I think it might work for the flies.

One permacultury way of handling the problem is to take and plant a cutting of a weeping willow tree (away from the house).Weeping willows generally grow next to rivers.
This should
(A) absorb some of the water
(B) the leaves falling will help add more soil and
(C) (If that doesn't help) You can chew on a branch cause they make aspirin out of them.
Either way good luck