I'm definitely inclined to take Psatma's word at the same level of Kellhus.
Therein lies one of the problems with Bakker's plot and its interaction with the narrative structure of the series. If we consider Kellhus an unreliable narrator when it comes to metaphysics, then we have literally
no revelations.
Nothing is known. Same goes for the Dunsult.
But yes, you're right. I would still trust Kellhus more because his starting position was rational, though it's a moot point.
Psatma literally states that she worships a demon when pressed by Meppa.
This is not at all how I see what happens in the scene you refer to. Meppa calls Yatwer a demon (not Ciphrang). It's completely in line with his beliefs, since he is one of the Cishaurim (whose views on Ciphrang are unknown). Psatma
taunts Meppa by accepting his terminology, which she then twists for the sake of psychological warfare.
I'm not sure I understand your point here. Yes, it's reasonable to assume Kellhus knows more about the metaphysics of Earwa than anybody else, but what does that have to do with how and what the people of Earwa think about Ciphrang?
My point is, their views and Kellhus's cannot be collated to form a united perspective. Just one of the simplest things as an example. When Kellhus refers to himself in the Outside as Hunger, he might easily mean that he is going to become a God, not Ciphrang. It's completely consistent with his terminology, but not consistent with the traditional one. The traditional terminology would mean that his plan is to become a Ciphrang, since the Gods are an entirely different thing.
Perhaps they're wrong in believing Ciphrang to be hungers
Not so much plainly and strictly wrong as being less coherent and using less consistent terminology than Kellhus because of their religious views.