Ok, but what does this have to do with the core theme of the fleeting beauty of impermanent life?

I don't think every single scene in every show has to be a rehash of its core theme. Do you? Regardless, I'll touch on this a little bit further down.

hy introduce a Talking Points USA counterpoint that empathy is a weakness, that we have to be selective in our empathy and only empathize with the right people?

I pretty clearly said I don't think the author was trying to make any point like this at all. But on thinking on it more, I can answer this on its own terms, see below.

Ok, but why does it have to be a little girl demon specifically tho. Why can't the challenge be a dragon or a magic plant.

I also pretty clearly addressed this. Neither of us needs to be told why a dragon or a giant maneating magic plant is a bad thing that you should kill. It's not a challenge to us, to our feelings, to come to the conclusion that those things should be fought. There is an artistic difference between the choice to portray an antagonist no one will empathize with and an antagonist which most of us will empathize with on some level, especially when that is exactly the challenge the characters in the story are grappling with.

Why is Frieren killing a little girl demon framed as heroic?

There are a couple of reasons in my opinion. First of all, Frieren is exercising a lesson she learned from the person closest to her so long ago. Her determination to destroy demons wherever they are found is part of her connection to Flamme. On some level, she holds on tight to what she was taught by Flamme, because she loves Flamme and misses her and wouldn't want to question whatever wisdom she taught her. On another level, part of her sense of self-worth is her effectiveness at fighting demons. She's been training 24/7 for centuries for the sole purpose of making herself as effective as possible at killing demons. She has to see the extermination of demons as righteous and heroic, or she's wasted a very long time even in elf time.

Another aspect is that Frieren is herself a victim of genocide. I don't think the demons are especially effective parallels for fascists in most regards, but they certainly have elements of fascists that I think are intended. I think that the fact that Frieren, whose species was nearly successfully exterminated by demons (perhaps even successfully--since the population is likely never to stabilize) is one of the world's staunchest and most powerful opponents of demons is intended as an anti-fascist allegory. She is heroic because she won't allow fascism to take root under her nose. When she sees them, she gets rid of them. Because she has seen first hand the genocide they will commit unchecked. Is it not true that fascists ooze their way in under false pretenses and innocuous guises? Haven't we all seen the baby-talking fascists spreading their fucking frog cartoons? There is an argument to be made that the "little girl" was precisely this disingenuous childish ruse fascists pull to covertly spread their agenda.