I'm not sure how popular assembly is in the modern demo scene on "normal" platforms (modern PCs, not retro platforms or embedded\mobile stuff.) The modern demo scene is mostly about cool GPU tricks written in HLSL or GLSL, which have huge advantages for both performance and space (see rendering the world with 2 triangles - http://www.iquilezles.org/www/material/nvscene2008/nvscene20...). It would be cool if the demo scene started focusing more on pushing CPUs instead of GPUs, but that would require adoption of really exotic graphics techniques that for some reason run better on a multicore CPU instead of a GPU, or a focus on something other than graphical effects, like simulation or audio processing. I agree that if you go back 10 or 15 years ago a lot of work was done in ASM, but GPUs have severely reduced that if not killed it outright.

Game engines still use a little assembly, sometimes a lot on the PS3, but often it's written with compiler intrinsics in C or C++. It also tends to be low level SIMD math code for physics, particles, audio or animation, which is stuff your average game programmer never touches.