I was just trying to do the same with on demand. I came to the same conclusion that it needed the files to be downloaded but I searched discourse anyway.
Having said that… the files do exist virtually as placeholders so to move those references seems trivial to me and an action that would be expected (at least by myself and Bluewings).
Upon sync I can see the issue since the files exist in the cloud so you would have to move the files themselves, but would this be so much different than what the app does anyway? (granted I don’t know, and don’t need to know, the details of the sync process which I’m sure are complicated).
IMHO someone with demand mode on should be able to rearrange to his/her hearts content and let the app do the lifting afterwards. Agree? It feels in keeping with the light nature of dttg.