I don't disagree that commercially available REUs were fair game, but a vanishingly small number of C64 owners had them, while a very large number of C64 owners had either datasettes or 1541s.
This doesn't take away from the demo, but if say, EA, Epyx, or Activision were going to ship a game that played music like this, they would have had to fix it in 64k. So it's even more impressive when I see stuff that a typical home computer could have seen in 1983.
I remember the first few times I heard digi-mods on the C64, like Rob Hubbard's Skate or Die game intro (https://www.youtube.com/watch?v=vqRXxPl6bXA) and it absolutely blew me away. Full screen video + audio like that Onslaught Demo would have given me a heart attack.