Is "these magical predatory animals are basically born in SS uniforms and are naturally inclined to do fascist things and orchestrate a fascist society" a flawed and problematic premise? Sure, it could have been done better, but ultimately the demons are bad because they are fascists, because they act like fascists and do typical fascist things. The conceit behind them is "what if a predatory magical animal species that's basically a walking weapon of mass destruction became sapient" rather than equating the elitist, extremely stratified, racial supremacist warrior empire to powerless real-world marginalized groups that elitist, extremely stratified, racial supremacist warrior empires claim are sneaky infiltrators trying to destroy everything from within.
The demons also notably exist as a discrete power bloc, and the only examples of them being sneaky are one attempt at perfidy - something the US and its allies frequently do - and one case of a captured demon demonstrating a confused and alien sort of morality when humans try treating her like a pet.