One of the running theories is that in her stories, she made herself a real murderer as a conservation of details, but then in real life, she was doing her murder game, but then someone took advantage of the opportunity to kill for real. Only the First Twilight is faked at best, before the killer then goes behind Yasu and "finishes the job."
And yes, the Tea Party is as you say. Battler "died" that day through memory loss, and his personality changed as a result, making him a different person. Depending on how you wish to interpret the ending, either Toya dies and goes to the afterlife with restored memory, or my personal favorite, the Battler and Toya personalities divide, with Battler going to the Golden Land.
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