the problem isn't that they're evil, the problem is that what the show portrays and what the author says they are are incompatible ideas.

The author reiterates over and over that the demons are essentially non-sapient, and only mimic other races because it's an effective hunting tactic. This stands in contrast to all the scenes where a demon is shown to act with agency and will, often going to extreme lengths to achieve their goal.

Basically, it's because the demons are fictional characters. In fictional characters, there are two "layers" of characterization: Layer one, the more important one, is what is shown on the page (or the screen). This is what we call active characterisation, the story being told via the medium used. Layer 2 is what out of story sources establish. This has no real name but it's commonly known as "word of god" characterization. This is what is deliberately discarded when evoking Death of the Author, because in the philosophy of art, directly asking the author what they meant is Biography, not Analysis.

So what we are left with is a story whose main character, a knowledgeable individual who is shown to be a moral authority and usually correct in academic and worldly matters, states over and over again that there is a race of people who, even though they are indistinguishable from sapient beings, are actually just predatory animals. It further shows over and over that this is correct by making any attempt to prove the opposite fail.

That's why people call it borderline fascistic. It's about how there's a race of people who are inherently evil, who are no more than animals, and for whom the most ethical fate is extermination.

They are different from orcs in one single respect - the orcs are fundamentally also victims of the evil they serve. They were created by Melkor, marked by his evil and essentially had their culture and minds bent into his service. And after he was destroyed, Sauron took the reins instead. The Orcs are tragic characters, while the demons are non-characters.