From "Demonology and Devil Lore: The Mythology of Evil", by Moncure D. Conway. Edited for length and clarity by cleo varra (IG: @cleovarra). 
The phenomena of the transformation of deities into demons meet the student of Demonology at every step.

In every country, forces have been at work to degrade the primitive gods into types of evil. We find the history of the phenomena suggested in the German word for idol, Abgott—ex-god.

In earlier times the rule was for each religion to denounce its opponent’s gods as devils. This was the fate of all the deities which Christianity undertook to suppress.

The most powerful priesthood carried the day, and they used every ingenuity to degrade the gods of their opponents. ‘Ours is the true god: your god is a devil.’
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Dualism, when attained, might produce the phenomenon called Devil-worship.

The theory of Dualism called for a supply of demons, and the supply came from the innumerable dethroned, outlawed, and fallen deities and angels which had followed the subjugation of races and their religions.

When we come to the particular names of demons, we find many of them bearing traces of the splendours from which they have declined.

Deity and Demon are from words once interchangeable, and the latter has simply suffered degradation by the conventional use of it to designate the less beneficent powers and qualities, which originally inhered in every deity, after they were detached from these and separately personified. Every bright god had his shadow, so to say; and under the influence of Dualism this shadow attained a distinct existence and personality in the popular imagination.

The best deity had a touch of the demon in him.

The word ‘demon’ itself originally bore a good instead of an evil meaning. The Sanskrit deva, ‘the shining one,’ corresponds with the Latin deus, AngloSaxon Tiw; and remains in ‘deity’.

The Demon of Socrates represents the personification of a being still good, but on the path of decline from pure divinity. Plato declares that good men when they die become ‘demons,’ and he says ‘demons are reporters and carriers between gods and men.’

Our familiar word bogey, a sort of nickname for an evil spirit, comes from the Slavonic word for God—bog. In the ‘Bishop’s Bible’ the passage occurs, ‘Thou shalt not be afraid of any bugs by night:’ the word has been altered to ‘terror.’

Even the horns popularly attributed to the devil may possibly have originated with the aureole which indicates the glory of his ‘first estate.’ Pan and the Satyrs, who had so much to do with the shaping of our horned and hoofed devil, originally got their horns from the same high source as Moses in the old Bibles.
In every country conquered by a new religion, there will always be found some, as we have seen, who will hold onto the old deity under all his changed fortunes. Still they will adhere to the ancient belief and practice the old rites. Sometimes even after they have had to yield to the popular terminology, and call the old god a devil, they will find some reason for continuing the transmitted forms.
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The theoretical degradation of deities of previously fair association could only be completed where they were presented to the eye in repulsive forms. It will readily occur to every one that a rationally conceived demon or devil would not be repulsive. For the work of seduction we might expect a devil to wear the form of an angel of light, but by no means to approach his intended victim in any horrible shape, such as would repel every mortal.
The very ingenuity with which they were afterwards invested with ugliness in religious art, attests that there were certain popular sentiments about them which had to be distinctly reversed. It was because they were thought beautiful that they must be painted ugly; it was because they were even among converts to the new religion still secretly believed to be kind and helpful, that there was employed such elaboration of hideous designs to deform them. The pictorial representations of demons and devils will come under a more detailed examination hereafter: it is for the present sufficient to point out that the traditional blackness or ugliness of demons and devils, as now thought of, by no means militates against the fact that they were once the popular deities.
Had the design of Art been to represent the theological theory, Satan would have been portrayed in a fascinating form. But the design was not that; it was to arouse horror and antipathy for the native deities to which the ignorant clung tenaciously. It was to train children to think of the still secretly-worshipped idols as frightful and bestial beings. It is important, therefore, that we should guard against confusing the speculative or moral attempts of mankind to personify pain and evil with the ugly and brutal demons and devils of artificial superstition, oftenest pictured on church walls. Sometimes they are set to support water-spouts, often the brackets that hold their foes, the saints. It is a very ancient device. These are not genuine demons or devils, but carefully caricatured deities. Was it to such ugly beings, guardians of their streams, hills, and forests, that our ancestors consecrated the holly and mistletoe, or with such that they associated their flowers, fruits, and homes? They were caricatures inspired by missionaries, made to repel and disgust, as the images of saints beside them were carved in beauty to attract. If the pagans had been the artists, the good looks would have been on the other side.
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