And demand doesn't double if the supply is doubled.

This is correct if we make the assumption of a zero-sum game. The point is that the demand is not determined by the supply (and viceversa). The issuance of new tokens on a blockchain is determined programatically and has no correlation with the price. The demand is determined by the expectation of potential buyers.

Of course part of the expectation of future value has some correlation with the supply but once both products start to diverge in development that correlation goes down.

In the short term the value will be split but in the long term we will see that each coin will capture different market segments (or not). Since the crypto market as a whole is tiny compared to the "real" economy we can't assume a fixed demand (in the long term) and therefore it is not a zero sum game.