^ Just curious (really, I don't mean this in a condescending way), but were the people you went with fans of Jack is Back as well?
I only bring this up because I think the two concepts are very similar- essentially big music/dance parties in the hamlets. They clearly work very well and are well liked by the public. Personally, I cannot stand them at all, but that's more of my aversion to stagnant crowds more than anything.
I think Demon Street's biggest draw is the "DJ" which creates a crowd of people, which in turn creates a larger crowd. If you took away almost everything else (the bar, the demon minions, the flames) and just had the "DJ" and fog, I think the crowds and opinion of the area would be the same. To me, that says that it isn't so much the substance as it is the spectacle.
I don't see an issue with thinking Demon Street is the best area of the park. The park is, after all, a business and having an area that the public loves is great for them (hi Bitten!). However, the attributes for something being the "best" vary greatly from person to person. As you mentioned, those attributes differ between, lets say, those who post on the FB page and the members of this site.
So, in my fairly long response: yes, I do think this area comes across the best because it makes the biggest impression. I think this is primarily due to the "DJ" and music being used. No, I don't think your friends have bad taste (although I'm surprised that the long-time HOS-goers didn't pick Ripper Row as their favorite), just different taste. Yes, there is something that is to be said for this type of appeal.
Finally, I'll say that there is something to be said for the wow factor, definitely. However, you need more than just a draw (the "DJ" and music) to make it quality, IMHO. They are 50% there with what I'd want to see in Demon Street (since it appears it will be here for a few years)- they just need to get to 100%.
(Also, to respond to something upthread- I'm honestly not sure which post this point, sorry- the whole Demon Street theme reminds me of the club scene from Bedazzled)