I struggled with demodex with Echo for a long time. Oral ivermectin and some homeopathic remedies (I don't remember what now, it was years ago) kept it at bay until he got a little older and his immune system developed a little better. He has pretty extreme allergies, and the two seem to frequently go hand in hand. As LaRen said, there are a ton of threads on this that will hopefully help. On the spots of skin where hair was missing but the mange was gone, I used MTG oil and it worked wonders for hair growth.
As for diet, I'd try nixing the grains- going grain-free made a HUGE difference for my guy- the allergies got better, and since his immune system got a break, the mange got better.
Delta zur Bindenburg- 11/15/13
Gentle Tripp- 6 yr old OTTB mare