But blue has more towns without penalty. Why bother cutting demons when you can scribble yourself a double and mass another strike stack... like throwing grands under oil into the center.

Well, if you scribbled yourself a double and your opponent didn't, what a noob they are. So the scribbling strategy here differs from the standard one — you need to either go for a double vs double or ensure neither side has a double.

Why are red's secondary towns inherently better for demonology?

Blue's secondary towns are generally better as towns themselves. Castle gives guaranteed stables and archers, Dungeon gives vortex and portal, Tower gives library. Plus yes, fewer penalties. IMO, in terms of secondary towns, blue has the advantage here.

Added after 6 minutes

What if I take Necro and fool around with the Converter instead of demonizing? Plus there's room for necromancy.

Necro on templates like this is usually red's first scribble. Since 5 free towns and late contact make it the strongest town.

It's also unclear what money will be used to buy meat from everywhere? Often on L-map you barely have enough money to rebuild your own towns and buy units, where do you get the funds for 4 more cities?

There's more money here than on other L-maps — each player has access to roughly half the map with 12th density of the lower range of content (for comparison, on CM-ka and 8mm6a it's 9th density). Plus 5 markets. But yes, you'll have to run for money; you need a lot of it here.