VMC demo for traingin is exactly that a DEMONSTRATION.
The word 'demonstration' is a poor word to be used in flight training, or at least in the context of training objectives.
In this context, it has to mean that the student multi-engine pilot must demonstrate proficiency in recognizing and recovering from an engine out at the Vmc of the airplane.
Kinda like a student single-engine pilot must demonstrate the ability to stall, or land, or execute a forced landing in a single; you know, the stuff he needs to survive a flight.
We don't demonstrate a landing to a student and expect he will be able to do it; he must practice.
The multi-engine student must practice Vmc recognition and recovery just the same as a beginning single-engine student must practice real stalls, and landings, and forced landings. These are fundamental.
The Vmc demo is a fundamental practice maneuver to get the feel of aircracft directional control in the Vmc region - like slow flight is to stalls.
Blocking the rudder is a good initial training exercise, like doing slow flight as a lead-in to stalls.
But, eventually, the pilot must experience and learn to control the airplane as he approaces real Vmc and recognizes and recovers a loss of directional control.
In training aircraft, where Vmc is at or below stall, rudder blocking is good to show, and practice, the loss of directional control of larger/faster airplanes since the ME rating is not make/model specific.
However, the student multi-engine pilot should also take these airplanes to the stall indications without rudder blocking, too.
The bottom line is that the ME student should be trained and have demonstrated proficiency in recognizing and recovering from the Vmc area in actual practice.
This is not dangerous stuff. The airplane is certified to do it. It's like stalls and spins in light single-engine trainers. If you're uncomfortable approaching Vmc, reaching full rudder travel, losing the heading and retarding the throttle, get some more training. Really.