Before this nerf, in competitive play, no one really had problems with demoman. There wasn't much big demoman complaint threads at all and we were fine with how the game was(aside from little to no support from Valve). Then Valve releases this nerf(probably to cater the pubbers/SPUFers) and as the demo mains start to defend their class, their are others attacking the class or reasoning about it like "learn 2 aim". I agree that before this nerf, demoman was okay, he did a lot of damage, that seems fine as he has 25 lower health than soldier and can be countered by scouts like usual. After this nerf, I feel that demo is not too bad in a rough shape, but the change has definitely influenced how demo is played now. Maybe it's Valve's intention to see the competitive community try to change the stage of "Dealing a lot of damage and having soldiers/scouts clean up" into "Demoman playing more carefully, tactical, and the reliance of soldiers/scouts to initiate", or some other type of scenario.
I think the nerf to demo could've been handled a bit better, Changing mechanics like the radius can be a bit iffy, maybe just a direct change to damage would've been better, or the splash damage would've been more acceptable approach. But the buff to the nade launcher is definitely a message from Valve saying to start aiming with these and use these more. It's understandable, a slight problem is that you only have 4 nades, and unlike stickies, if you miss you can't just "detonate" them, same goes for rockets, but the way you aim rockets and nades are a bit different in the end. I'm not saying that this is the best option, but maybe having 6 nades in a clip(heck the model shows 6 slots right?) and decreasing the amount of stickies in a clip might be one way that Valve would see that would work. As it is harder to aim pipes than shoot stickies in a pub, the pubbers can deal with it until those people get better at pipe aim and start complaining to Valve again.
In conclusion, the nerf to demo has definitely changed the role of demo, whether this is a good or bad thing has been shown in different perspectives, adapting will have to be the result most likely in order to survive, and we'll have to hope to see if Valve can do different things for demo.