Why the game hasn't been announced for Virtual Console yet:
Vic Tokai's not in the game business anymore, having returned to their original business of cable TV (and now Internet) service. Nintendo probably hasn't been knocking too hard on their door, either. Considering that an ISP has the equipment to upload some ROMS if anyone does, maybe they should look into dumping some games onto the VC and making a quick buck.
Why we think it should be on the Virtual Console:
We love the structure of the game: short levels punctuated by a map screen that allows travel between branching paths, exactly like the layout of Bionic Commando. Having such a layout adds replayability and a sense of discovery.
Also, the game is charmingly awkward in that inimitable Engrish way. Dialogue sequences are labeled TALKING TIME-- when the protagonist is telepathically attacked, he enters Talking Time by himself. Should you accidentally shoot a comrade (because up until that point you've had to shoot everything), rather than taking damage, he reacts with a voice bubble containing the word "NO". Just shooting the little guy and getting "NO" is a couple of minutes' worth of fun.
For all this, Demonhead is surprisingly sophisticated. There are a ton of items and upgrades, which actually affect your character's appearance, but can also open up different areas of the game, similar to the method of progression in a Metroidvania game. We wonder why more games didn't follow the Bionic Commando model? Surprisingly, Super Mario Bros. 3 did a little, although it was more strictly linear and involved less (no) backtracking. Quickly selecting paths from a map beats a boring, confusing hub world any time.