Really enjoyed the demo! It's such a unique approach to a horror game having item interaction affect the outcome in this way. Extra points for non-Western folklore. I'm very interested in seeing the end result! Very good job so far and good luck with your Kickstarter campaign!
My one gripe with the demo is having to hold and drag instead of just clicking to interact with things, but that's just my preference.
Also, when we interact with an item and it triggers dialogue, I'd love to be able to choose when to exit from the text. The subtitles disappear quickly and those of us who don't speak the language need time to read them since we won't know what's being said otherwise. Beyond that, nice work!