Neku appears as a guest character in Sora's side of the TGS demo -- though not a playable guest. Both Neku and his rival/friend/frienemy Riku team up with captured dream-monsters this time around rather than fighting alongside licensed characters. Neku's role is more that of the Disney-world guests from previous games. He shows up, reveals that he's caught in a "game," leaving him 43 minutes to win or die. Naturally, he asks Sora to be his partner but ultimately decides the tousle-haired protagonist is "a weird guy" and takes off. Sora follows, riding rails in pursuit of Neku, but quickly encounters a boss battle set in a cul-de-sac of Traverse Town.
Both sides of the demo (Sora and Riku) are essentially the same, really: A brief story set-up, a few set encounters, and a boss fight. Riku interacts with Quasimoto from The Hunchback of Notre Dame, which is admittedly less interesting than Neku; on the other hand, Riku has a double-jump, which is always great. The demo is just enough to give a feel for what KH3D adds to the series. While the camera is still a hyperactive mess that makes boss battles a pain (all the 3DS's buttons are used, so there's no lock-on system that I could find), everything else about the game feels significantly improved over previous Kingdom Hearts. The action is fluid and smooth, with much more refined combat. Fighting enemies feels less like combo-driven button mashing that locks your hero into canned animations than in previous installments, and your skill set has been improved considerably. Both demo characters possess a standard repertoire of magic skills such as Cura and Blizzaga, which are activated and cycled through as they were in Birth By Sleep, but they also can perform special Dual Link attacks with their partners by pressing Y.
Dual Link skills are context-sensitive and seem to vary according to your current partners, enemies, and positioning. You can pull off different skills while on the ground or in the air. A key part of these skills seems to be something called (inexplicably) Holy Rope, which are a series of nodes placed around battlefields. Pressing A and X while near one of these Holy Rope points freezes the action and allows you to use the touch screen to draw connections between points on the area map, which then sends Sora or Riku dashing through the air along the prescribed course. Using the Holy Rope paths to intersect foes allows you to pull off standard or special attacks while they're otherwise out of reach.
The TGS demo of Dream Drop Distance is fairly brief -- about 20 minutes to complete both portions -- but shows a game that looks and plays beautifully. Square hasn't formally announced a U.S. release date for KH3D, but the notion that they wouldn't localize such a sure hit is enough to get a man laughed out of the room. Honestly now.