I do not find the new lack of blood exploding from enemies to be all that disheartening, especially if it was done for a stylistic purpose.
Maybe Suda thought that a Tsunami of blood coming out of enemies did not fit in anymore with what he wanted for the game. Maybe, like Dirk mentioned, since this was a demo made for TGS the blood was removed for the sake of "the children" that played it on the show floor, and given that blood stains are all over the walls in the Destroy Man's battle that might be a possibility. Maybe we are looking at the Japanese version, when the NA version will have the blood back in, considering that the American GCN Killer 7 was the only non-censored version this may be a good possibility as well.
Regardless, I do not care, and even if it turns out to be a "mediocre game with stylized graphics" I will still buy it because a loved K7, and there are some games I play just to experience them, like Seaman, Hotel Dusk, and Killer 7.