A question for demo coders really.
Is it difficult to make an executable 3D engine for demos, like the yearly
releases of Farbrauch?
Just the engine part is what I need some advice on.
and, What kind of support requirements would a 3D engine like that have?
Such as 3D mesh import/alpha support/fog etc... 
Yes.
Its an interesting question what it would contain. I'll take a stab at answering:
* Scripting engine
- can script most of the below...
* FPS counter
* Mesh importers
- supports animation too
- supports texturing
- mesh subdivision (optional)
* Image importing with masks
* Texture gen engine (FRs supports this)
* Particle system
* Rendering Effects
- shadows
- (AO - optional for now)
- HDR
- Phong
* Layer handling framework
- offscreen rendering for various layers
* Transition framework
- fade, wipe etc.
* Postprocessing framework
- render to texture support
- render to Vertex buffer (optional)
- defaults like glow, blur, radial blur, static, scanlines etc.
* Shader framework (eg GLE)
* Sound playback engine
- synch with graphics required
* Loading and options dialogues
- should auto detect useful settings from graphics card
- Loading sequence
* Would need to support compiling in several forms
- DLL for use with demo tool
- Debug/release mode
- possibly size crunched mode (optional but FRs lib does this now)
* Clock handling
Gotta go to work...