I thought a very nice idea of doing a demo for a hack was using the kiosk demo, however, I don't think it can be found anywhere. Sharing it here would be as illegal as a full game rom? Does anyone even have one?

Not sure if this would be illegal but why take the risk?
I get your point about a hack demo, but not everybody has one and if it is illegal to share it this won't change.

And no, I don't have one.

But I like the general idea. Maybe someone made an ASM hack that locks W2-W8?
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previously (un)known as BooChewbaca

I guess you can lock the W2 worldmap by removing a path connecting World 2-start with W2-1, or (if you want "thank you" levels) other ones. We have enough worldmap editors.

Could also just tell the game to not unlock world 2 after 1-Castle.

The kiosk demo has a timer in it which can often already run out before world 2.

So there is pretty much no reason to use it not even considering nobody want's to pirate another rom.
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GitHub - Kuribo64 - YouTube

Question is how to tell the game this.
Can this be done with a worldmap editor? Or is this something one could only achieve with ASM?
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previously (un)known as BooChewbaca

I did this for my first hack.

Use wip Goombatlas - The NSMB Worldmap Editor. Download the original World 1 map and open it in Goombatlas. Go to the Castle node and uncheck "unlock next world" or anything similar. Download worldmap.h and follow the instructions to export the code. Compile it using this modified version of NSMBe, ASM Patch Template and DevKitPro. A lot of errors may pop out, just ignore them and click on the red X for 2 minutes.

Just for safe, you should probably apply this ASM hack as well. Change route upon finishing World 1 to 00.

Edit: Fixed links can't fix the editor link, perhaps you should ask RicBent for it.
Edit (again): Updated editor link provided by RicBent
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Check out these awesome hacks! Beyond DS is now my major hack!

Would try this out.
But the modified version of NSMBe is not available aswell as the asm hack
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previously (un)known as BooChewbaca

The NewerDS NSMBe mod I made should work as well as it also contains the replaces system.

https://www.dropbox.com/s/19gb9n8x69oz738/NewerNSMBe.tar.gz?dl=1
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GitHub - Kuribo64 - YouTube

I have a copy! It will not launch on any 3DS, it will give you everyone's favorite black screen of death...