Demos pretty much boil down to how can you exploit as system (cpu registers, hardware, how it all interfaces, amount of ram). Demos tend to build or decompress items into ram as well (setup prescaled frames during runtime VS stored format) - the PCE doesn't do so well in that area if it's a hucard platform (8k of ram). Special effects can be done on the PCE, exploiting the planar format, but you need fast bandwidth and that usually means storing graphics in ST1/ST2 embedded opcodes (bloating its size). Planar sucks for fine pixel placement, so you need 8 offsets of images (couple that with embedded bloat). Some really interesting things can be done on the PCE, but it's starving for ram for these kinds of things.
The PCE hardware is also pretty straight forward, so not a whole lot of "unique" things can be done with it. You basically have to really think outside the box and come up with your own new effects. Watching other demos helps gives ideas, but prepared to write some really crazy code (complex, convoluted, etc).
There are a handful of hardware tricks you can do on the PCE that emulators don't handle. They aren't super fantastic, but the trick is finding something that exploits them. I haven't tested it, but I have a theory about how to gen lock the cpu to the video display inside an hsync interrupt (which could be useful for a couple of effects). There's the undocumented VDC regs 3 and 4, which use the VRAM read register to do weird things (it's a bitmap of the 16bit map that sets thing on/off on the VDC). Half height sprite mode (which can be changed per scanline to do vertical warping stuff on the sprite layer). 128x128x16color byte bitmap mode (with free transfer/erase via vram dma). Or a 64x128x256color byte bitmap mode (128x128x256color for SGX). The bitmap modes can be horizontal or vertical sequential - allowing for a fast raycaster engine. Using the VCE to do stretch pixel interference on screen (in whatever patterns). Stuff like that.
I started doing some demo effects and saving them individually, but never got around to putting it into a fancy demo. Presentation is everything, and while I can code and make crazy effects... making/designing great looking demos isn't my thing.