As a student I like to see demos, not really to judge the instructor (as I assume that he is already proficient, until proven otherwise) but to better comprehend the technical skill and to see it in play. I do demos for the same reason.
When I do a demo I am generally at about 75-80% of my top speed. Not because it is too fast to catch with the naked eye, but because I want the students to understand my accuracy demands, and with my target audience, I am generally 10-20% faster at 75% than they are at 100%, and I usually shoot the demo clean (we all have bad days).
I consider manipulations, grip, stance, recoil management, presentations, draw, shooting on the move, and supported positions to demand a demo. For example, I want the shooters to see a clean Half and Half and understand the drill before shooting it.
However, some skills do not benefit from a demo, but rather an explaination and physical interaction. Examples are- trigger control, aiming/sight use, grip pressure, the mount, and cheek weld. There are certainly others as well.
As far as “demos are a crutch” I can agree with very basic skills or simple concepts- I have no interest in watching or demoing 50yard pistol one-handed bulls-eye slow fire. Other than that, I think that a demo is pretty important.
Instructors without guns? Why?
If one wants to ensure that he is using weapons identical to the shooter’s, I would want to just have a setup that I knew, was properly adjusted, and worked. But that’s just me I guess.