Isn't it possible that they simply evolved? After heaven helped the "good demons" seal the old ones they became a proper society with rules and obligations and as such had no further use for their demonic powers until the release of the runaway spirits

I'm guessing the cloak is simply an utensil they came up with to make up for their newfound shortcomings

Anyway just a counter theory i'm throwing for the sake of argument, good to have you on board Kraco