Are the prices mainly dominated by their demand for trading purposes? rather than their demand from people who actually want use the currency?

Yes. Bitcoin is the currency with the most real demand and my guess is that there is still a lot more speculative demand than real demand

If this is indeed the case, has a study been done to determine these two proportions?

It would be very difficult to get accurate info on this but you can look at transaction volume and compare it to daily volume to get an approximation but even this wouldn't be accurate as many traders also send coins in and out of exchanges.
You can also contact payment processor like bitpay.com and ask them some numbers, like how many people actually spend bitcoin to buy stuff.

If most of the coins demanded are by traders for investment purposes, does it mean the prices are super inflated? and don't actually represent the real values of the currencies?

People are speculating on the future price of these crypto currencies, and since they are a superior form of money people are very confident about them. Most of them also have a limited supply so people hold them like gold as an hedge against inflation.
So yes currently most of them are inflated, the price can drop very quickly on a bad news but the potential growth for these crypto is enormous and if you look at the chart you can see that they are growing every year.