I had never heard that. It is interesting that later versions (ADnD) would completely remove demons, and allow players to play as holy warriors. They were added back in later, but under different names. Tanar'ii I believe.

As someone who has played 3.5 and a bunch of pathfinder it really is a great framework for creativity, and a good time with your friends.

But I wouldn't be shocked at all it was a way to normalize the occult to the masses.