Where did you get "your" Paperwhite from? I'd say you should contact Amazon support.
"Demo mode" is not a problem, so not something to "solve". It is an intended mode of operation. That said, yes, you can flash "normal"/"customer" firmware for K3/K4/K5. But there is no way to put a KPW into USB downloader mode, so this wouldn't work for the KPW. Only option might be serial connection, but I'm not aware of a how-to description.
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