To echo David's post, and elaborate on my own (I was in a hurry when I replied), BIAB is absolutely used for demo purposes. That was actually my entire reason for getting it in the first place, and I've found it to be an excellent tool. I have a number of peers who have done likewise.

I'm probably old school in this thinking, but I still believe that a great demo can't mask an average (or worse) song. One of my favorite Nashville cliches is "when you polish a turd, all you get is a polished turd". A great demo (like you can get using BIAB) is a wonderful thing to have when pitching your songs, either to publishers or artists, but it's still going to be all about how good or great the song is in the first place.

http://www.rogerbrownsongs.com
http://www.nashvillesongwriters.com/roger-brown