It all depends on your personal risk tolerance. I wouldnt do that, especially if you say your "main fear is chips / scratches in the paint". On a brand new model 3, you can hassle tesla to fix that. On a demo, they are likely going to hassle you (more than usual) and say "its a demo."
There generally isnt enough discount for it, for me, anyway.
You are better off trying to join one of those groups where people stalk in stock vehicles or something. I dont have details on that myself as its also not something I was into (preferring to wait for "brand new just made latest vin" model 3 and Y when I bought mine and my wifes car respectively, but I think there is some group or other where people track that.
In general, although "better" teslas are not perfect off the line by any stretch, and me personally, I would question where this 500 mile demo actually came from, why they had it, what is the repair history, etc. I dont even know if they will tell you all that, but its something I would personally have to know, for myself.
My risk tolerance is very low for things that cost this much money, though. I am also not a person who would buy a "treadmill in a garage sale" or anything like that, either (my treadmill was bought after I researched them, and I bought the exact brand / model I wanted, brand new). I mention that for full disclosure on where I fall on this stuff to give the appropriate context.