When Rav Nahman talks about Torah scholars that are demons (note 1) it is not possible to say that he means this as an allegory or just some way of putting them down. The reason is that you can see that he believed quite literally in the existence of demons. [As you can see in his 13 stories.] So he must be talking about possession.

The idea is  that as people grow older they change. So are they the whole time exactly the same person,-? Or is it that at some point they have changed so much, that they are no longer the same person? When a caterpillar changes into a butterfly, is it really the same thing? Or has it changed so much, that the very essence of the being has changed?

So is is possible that  Rav Nahman is saying about many Torah scholars that they have changed so much so from their human essence that they actually become תלמידי חכמים שדיים יהודאיים [Torah scholars that are demons.]

[I am pretty sure that most people can tell this type. It is no secret.]

This I must add does not refer to Litvak sages who are simply trying to learn and keep Torah. The difference is easy to tell since in the Litvak world there is no scamming or falsifying what the Torah says or means. 

(note 1) Lem I:12, LeM I:28