Actors are so poorly paid that they deserve to use their work to futher promote themselves - lawyers also know this and realise the futility of suing an actor - remember in the end it's art...

As said, a can or worms...
Usually the Producer is the owner of the material to 100% and also "say-so" about what goes and what doesn't.
A good contract (not saying it has to be a 800-page US contract) is the best way to avoid legal stuff - in Sweden a spoken agreement is as firm as a written and thus you can spend hours in court, word against word.

I'd guess if the "demos" are handled with good care and reflect your artistic quality etc. and with a on-screen stamp/note "With curtesy of Jeff Cooper Productions, www.JCP.com" I'm sure that you and the distributor would get good publicity.

Do you actually sell the rights to the film to a distributor? Sounds weird. Why? They can peddle it, but why give up the rights?

Well, if you want a distributor to pick up your film and spend a small fortune promoting and distributing it, you have to grant them rights to the film for a certain period of time, usually 6 years. It usually amounts to a 50/50 profit split during that period. It's pretty much a standard practice as far as selling your film to a distributor...

Congrats on the films completion and hope you can get some good distribution on it.

As for demo reels. I have cut several for various actors and never has any issues, nor have they. From a production standpoint the films I have done/worked on normally have an agreement with the crew and talent that once the film is completed we release select scenes only for reels. Obviously this also means that an actor who has a bit part would only get that scene and they may complain but our question is always "If you need it for your reel why would you need scenes that you are not in?". Doing it this way saves allowing someone access to the entire film beofre it is released. This also goes for the crew, we might allow the director or DP, for example, to come look at the film and let them pick out 10 minutes total for their reels.

It is really up to you how you handle it but IMO you are safest if you do not allow anyone to have the full film because I assure you it will pop up somewhere and cost you distributuion somewhere. I think I have told this story before but one film I worked on was sold to a country and the following years AFM the buyers came in and ripped up the contract and demanded his money back because the film had already been released. The main guy at the studio pulle dout his list and said there was no way - uit was not out in that country. So the next day the buyer come sback with the film - full on "pro" looking package but the actual film was a screening copy with time code *and* "Do not distribute" in the middle of the picture. It was clearly not quality and clearly not legit but the buyer did not care because the fact was in their country the film was out already. The film had come from one of the stunt people who probably gave it to a friend who made a copy and sent it to someone and so on.