That sounds like the very definition of an irregular development cycle.
It's irregular in that it's not a game that has been worked on all the time because of other projects, but it's not irregular in that it's somehow been hugely problematic and Nomura doesn't know shit about what direction to take the game or what he's doing.
Is anyone even working on Versus right now?
Possibly not, at least not a large team. XIV 2.0 seems to have crippled pretty much most of their HD development except whatever the Osaka team might be doing (since that is not in Tokyo but... Osaka, probably easier to let their do their own thing that mix them up in it too). I'm pretty much assuming even Lightning Returns is mostly outsourced to Tri-Ace (even to a higher degree than XIII-2 before it).
Do we have an ETA on a playable demo?
No, why should we? If it's not being focused on, it's just better that they keep quiet about it and not raise false hope.
Is there any reason at all to believe that the promises first made over half a decade ago will actually come to pass?
Given that those same promises have been repeated, build upon and even somewhat shown to be true, yes? The game might end up controlling like shit or something, we can't really judge that until we've played it, but the scope is not something that is likely to disappoint. The world will be huge and you'll have reasons to explore it & will have different means to do so.
Has Square given anyone any reason to have faith in this disaster of a project?
Please explain how is it a disaster? It has a capable team behind it (KH team + a lot of people who worked on FFVII and even SQEX's masterful CGI team is giving a hand) and it taking this long after the announcement is a combination of them simply being stupid with announcing it, like, almost two years before they did much on the game and them not being able to have a full team to work on it for long periods of time once they DID start to actively work on it. That's not a disaster, it's just a victim of certain circumstances they don't have any say in (XIII's development being what it was, XIV 1.0 being a disaster at launch).
