The NPC theory essentially dates back to the Gnostics. They called them Hylics, basically people who only exist in the material world. It's unclear whether they meant they literally don't exist as in they don't have a soul, or it's a consequence of their life outlook that they've limited themselves. If we go with the theory that they're soulless, that could mean they're organic portals that can be taken over by Archons since the body has no occupant. Like Mr. Smith taking over random people in the Matrix movie. "Real" people can be taken over by Archons as well, but it's more like parasitation, not a full take over. The opposite could be true as well. A real soul could come down, what the new agers call step-downs, and occupy a body without an occupant. So I suppose it's not a hard and fast distinction.
Anyway the idea that some people are simulcrae isn't that crazy. Then if you look at descriptions of the Demiurge, it sounds a lot like how a person would describe an AI if they had no exposure to technology. I reckon shit has been fucked on this planet for a long, long time, people just don't notice because they're too caught up in the consensus reality the game makers have been creating for them.