Personally I think that putting the making of a demo in the hands of strangers is taking a big chance. OK technically the end result will be up to a certain standard musician wise and recording wise.....BUT.....is the end product truly what you really wanted and imagined it would sound like and will it have your own personal stamp? It might be OK for non performers or hobbyists but not for me. I like to be there in the studio as I feel the need to supervise the recording and have direct input at all stages.....I also like to perform songs myself and interact face to face with enginers and any musicians laying down the other parts. I do no think it can be done to my satisfaction over the phone or internet....or by sending home recordings to be turned into demos.
Allowing others to make big decisions on my behalf and without much of my input is not for me. It is my money and I want to see for myself how it is being spent.
By way of an experiment I recorded a song at home and sent it to the studio. I left them to comp it and edit master etc. The end result was OK.....but not what I really wanted and many changes had to be made. Many hours were wasted.

http://www.soundclick.com/bands/songInfo.cfm?bandID=687727&songID=5238055