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I might be over-thinking, but I think the main problem of this episode is the "bigger Schrodinger's cat box". Beatrice (as game master), and Willard have both said that the events of the 2 days (Oct 4-5) are in the cat box. That's implying that the events were open to different interpretations, and thus we have the different games. That's also why Battler is going to open the box in ep8 (hinted, I guess).
While the events in Ep7 explained the major events leading up to the 2 days, it was actually in fact a bigger cat box containing the smaller one (I forgot if Berun or Willard said that). This is apparant with the flashback quote from the end of the tea party, suggesting that Kinzo actually started the whole fight between the Japanese and Italians. (He does have the motive and the way to pull it off), which wasn't shown in the narration in the main story.
So, did those events really happen? I would say yes, but maybe some details are still being withheld from the readers.
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