They have formed a committee to oppose the appointments, saying at a time Nepal is writing a new constitution, Nepali priests should be employed instead of Indians.
Though the protesters say they have no political affiliation, locals said the attack was led by the Young Communist League, the dreaded strong arm of the Maoists that had spearheaded a similar attack last year.
Both the new priests' appointment and the attacks on them come at a time the row is being heard in court.
For the first time in the history of the 5th century temple, the Mahasnan ritual - the ritualistic bath of the deity - is in jeopardy with the priests saying they feared to carry on with their duties in the absence of security.
The Indian priest vs Nepali priest row was triggered by the earlier Maoist government last year that sought to stop the old tradition of hiring Indian priests for the Pashupatinath shrine.
However, the move raised widespread concern in India with major political parties there asking Nepal not to politicise religion and not to hurt the sentiment of two billion Hindus worldwide.
The protestors have said they would keep up a blockade of the Pashupatinath area and take stronger action if the Indian priests are not sent back.
Of the five Indian priests who originally served at the shrine, three have already resigned due to the mounting political pressure.
Both the protesters and the Nepali government allege that the other side is trying to grab the offerings made at the temple daily that runs into thousands of rupees.