If it is 40% complete you should most definitely stick an early access or demo tag on it otherwise you would be sunk before it completed with bad reviews.
Using is as a demo for the full game would pretty much kill any need for activation as it would not be the full game to begin with so it wouldn't be needed.
So seeing that it is far along enough to be playable, yet not far enough to prevent flaming reviews I would use it for a demo.
Just my opinion but what ever you decide I most definitely wish you good luck on it.
