Wow! That sounds really cool! I can't wait to see it--and I'm curious to check out the demo now ^^
Since the rules confuse me a little, I was wondering if I can apply the game to the jam or does the demo disqualify us?
I'm actually thinking of modifying that rule, because I have a few folks who also were tinkering with making demos.
I mentioned off the record about calling it like an "Act 0" or a test run; So long as it has a sort of ending.
So if you can wrap it up to be a self contained story, you can always prompt to see the continuation in the full game. I just want to prevent half done projects, if that makes sense. Cliffhangers are a-okay, but stopping in the middle of a prologue a little iffy.
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TLDR: To answer your question though, your demo is already out, so you definitely qualify since the project you're working on now is the full game itself!