The reason why using evade breaks you out of Punisher mode is because Punisher mode slows down your movement and puts you into a tactical stance. If you evade away, you put your guard down. It's a trade off. It also is free to go back into Punisher mode, so it's really not an issue in any way.
While in Punisher mode, you also can counter any attack by guarding and that allows you to stagger enemies like Shock Troopers which is really cool. You have to trade off positioning for this enhanced form.
Something important to remember, this is NOT a typical action RPG combat system. Don't expect to be able to dodge incoming damage freely like you can in other games. As someone else pointed out, evade is really about positioning or avoiding telegraphed attacks like Guard Scorpion's point blank AoE.
Guard is used just like it's used in the original, it's to help mitigate incoming damage, couple that with the counter attack while in Punisher mode and you have different ways to deal with incoming damage for Cloud in the demo. Barret has Steel Skin which also gives him a defensive buff which allows him to take a bigger beating.
I don't see any problems at all with defensive options because this game you are going to be taking damage unless it's avoidable. That's just the nature of the game, that's how FFVII played as well. You didn't dodge out of the way of incoming attacks. There is however Materia in the game which can change how the combat flows with evasion like Deathly Dodge which will add attacks when evading and things like that.
Ultimately, it's better to judge the combat system when you get the full game, or to look at the press footage in how combat will be played out. It's really about managing ATB between party members, using your character's unique abilities and playstyles to deal damage. There's also going to be weapon specific abilities that you can master to use on other weapons that augment how you play the game.
As for Limit Break gauge filling, people must not remember that it's the same as the original game. You gain limit break faster by getting attacked and not dealing damage. FFX broke this mold by allowing you to change how you would fill the Overdrive. Some of you question why you're not rewarded by doing a lot of damage, and you're kind of missing the point. That's exactly why you're not rewarded with Limit Break. You're doing more damage than someone else who is taking by far more incoming damage.
Playing the game successfully in that you are avoiding damage and doing a lot more damage yourself means that your Limit Break isn't needed. Whereas, if you're taking a lot of damage, you're not mitigating it or not avoiding AoEs you are taking a beating and need to spend ATB to heal up or put up buffs. This means that in order to compensate you for your lack of damage, the game rewards you with increased limit gauge where then you spend on a big attack.
In the original game, you also had ways to augment the gauge with a give and take system (fury and sadness status ailments). It's possible there's a way to augment this in the remake, but we'll have to see.
Ultimately, I think the combat is the best hybrid system of action and strategic combat. I think taking away the focus on a pure action game allows it to feel comfortable to fans who wanted a more turn based system. But, also, in doing so it really brings VIIR's combat system into its own and gives you a great deal of things to do and make combat feel busy and not just a slog of mashing buttons... something that XV suffers from greatly.
I'm super excited to get my hands on the full game with Materia, weapon upgrades and abilities. For people who haven't seen it, you should definitely check out the Air Buster fight where you get a good sense of how dynamic a boss fight is in this game. They even split up the party like in the original and you have moments where Barret needs to do damage to bring the boss back into range for the melee fighters Tifa and Cloud get to do damage before it spits fire out and moves away again. Maximizing your time on the boss while you can... it's just amazing. I could go on forever, but I think I'll end it here before I rant on some more.