In a partnership there is a lot of give and take, and I believe in my team, they are world class, but when you have a publisher there are things happening you'd rather not choose. Shipping old code out 3 months prior to gold master to a 3rd party with no stake in the demo success can be problematic. I am sure they made the best demo they could but as a studio packed to the gills with gamers, we refuse to believe code has to be unplayably buggy at launch, it doesn't.
I had the same experience working on ESPN Baseball back in the PS2/Xbox days. In order to have the demo out before the release, we had to basically release the previous year's game with just a few additions. Of course, the demo didn't actually come out until months later, after testing/bug fixing, magazine lead times (we shipped it on a disc with print mags), etc. It took up a bunch of time that could have been spent on real development and started a narrative on forums and among press that the game wasn't different enough from previous years, even though it had the most additions and improvements of any entry into the series to that point. But these days, it's all about visibility, and to get it, you have to have a demo or be making a sequel to an established series.
I've seen you in EQ2 (Unrest), the OOTP forums, and a few other places, and I gotta say you are a pretty intense guy and passionate about what you do. Good to see that a few years of hardcore game development, all the stupid crap, long development cycles, inevitable disappointments, and probably some days when you look at your bank account and wonder what the hell you got yourself into, haven't dimmed that.
As far as the game goes...it looks like something I'd get into. I met the combat designer and some other BHG guys at GDC last year and enjoyed talking with them. I'm sur ehtat the game is bound to have some rough spots as a new IP, but it's also doing a lot of things that I've been waiting futilely on Bethesda to do since Morrowind.