You know, now that I think about it, wasn't Demise referred to by Fi as an "it"? It seems to me that this implies that he may be a sort of physical manifestation of all evil that exists in the world, like a personification of sorts - evil itself. This not only explains why "he" is referred to as "it," but also the fact that his appearance differs depending on who sees "him" [it], such is the case with the real-world concept of evil. The way Link "sees" Demise [evil] seems to bear a striking resemblance to Ganondorf, in my opinion...
This seems like the most credible way of looking at it. Given his name, Demise represents all sorts of nefarious epitomes that would strike fear into those devoid of Courage, because of what he embodies--Death. I'm certain everyone has a disparate interpretation of what Death might look like to them. For Link, it would be the personification of Ganondorf, though that figure comes later in the future... Nonetheless, Demise could also be a devilish figure, the opposer of Din, Farore, and Nayru, the three keepers of Hyrule. To dominate the land would mean deposing the three goddesses, thereby becoming ruler over it. And with the power of the Triforce, which he'd supposedly inherit, Demise could obliterate Hyrule and recreate a world of his own. In that way, he
might already know what Link would come to ultimately fear, and takes that form early so that Link's reincarnations might remember the fear and dwindle away. Ah yeah, time paradoxes for the win.