Except for the fact that they explicitly state that she was impressive in how she "Struck fear" into their hearts. Being in a position of power that demands respect is not the same as making people fear you, and striking fear into others doesn't seem like something needed to justify her position of power, especially that display of her cracking the entire building around her.
Like literally, it was a peace agreement, that could have been seen as an act of aggression. If THAT is considered a normal "Display of her position" as a demon, that just pushes forward the narrative that the demons are an intrinsically war loving race that desires to dominate over those they consider beneath them.
This is canonically a different culture, though. Who knows what they consider an act of aggression, you know? In their culture making people fear you could literally be seen as point of obligatory politeness. Maybe it isn't, but maybe it is. Neither of us know, so it's ridiculous to act like we do. I'm merely stating a possibility that you seem to be unfairly discounting due to the fact that you seem to be unwilling to conceptualize a fictional foreign culture.
Like, you say that "striking fear into others doesn't seem like something needed to justify her position of power," but you know what else doesn't make sense to justify positions of power? Wearing ironed suits. Having short hair. Speaking in a well-regarded sociolect. Our own culture has a bunch of random nonsensical things that indicate politeness and convey authority; what's so odd about a fictional culture having different odd things that convey authority?
To a certain extent, I'd say that "making people beneath you fear you" makes more sense as a indication of authority than some of the nonsense we've got in the US or Japan or the UK or France or wherever. Does them saying "y'all"
really make sense as a reason to think poorly of someone?
We're talking about a fantasy race that values power and wants to prove it. I feel like that's literally enough justification for a VAST amount of fantasy races that already exist in media.
Most real life cultures value power and strength, almost certainly including the one you yourself are a part of. (Unless you're going to tell me that your culture doesn't see strong men as superior to weak ones?) And yet most real life nations do not go to war over such trivial reasons as to "prove [their] strength." Because that's just a stupid reason to go to war! You don't get anything out of it, and instead just end up losing resources, man-power, political standing, territory, &c. &c. &c. There are plenty of reasons that nations go to war; "We're awesome!" is not one.
Maybe other fantasy worlds don't really care about this and do have war-mongering races that go to war for no reason other than that they feel like it. But you have to understand that you're reading a manga about a demon princess that has fallen in love with the human hero and is upset that he thinks poorly of her. Literally where do you think this is going to go other than "I've misunderstood you, my love, let us have fifty million half-demon babies!"?
So regardless of what either of us thinks about the reasonability of the demons not actually being evil, the point's almost certainly moot, anyway.