I would love to know more about the pool party. Lori is on bodycam footage at something like 10 a.m. saying they just moved in and haven't met anyone in the neighborhood and before the day is over people are complaining about the noisy party. Lori and Alex's family are in the Phoenix area, did she invite them over? If it was family surely someone would have asked about CV, unless they knew and were there to celebrate. If it was friends of TR there would be too much risk of her talking to her friends about what happened that morning, IMO. I guess JJ didn't see anything so it could have been friends of his.
I think you might have answered your own question.
IMO, the problem with any scenario is that neither Lori nor the kids have, by Lori's own admission, been around in that area often enough to have amassed friends.
We know the attendees weren't the neighbors; because Lori betrayed that in her scant "bodycam testimony". "OOOPS! Sorry brand new neighbors!"
IMO, it makes no sense unless these attendees were already-extant intimates of Lori; and/or people who wouldn't care if it had been reported to them that someone had just died in the house (family loyal to Lori, as you suggest).
There's a hugely outside % possibility that Lori had invited a batch of brand-new-to-her peeps, and didn't think she could cancel on them on such short notice, thus opted to keep schtum but again, who amongst such a branch of people (strangers) would feel enough loyalty to Lori, not to blab to LE OR to media?
Because Lori either (a) told the attendees unabashedly; or (b), she didn't tell them; and I question whom amongst any of Lori, Tylee, or JJ would have had enough organic local friends at the time. (Plus, I think most people know the difference between joyous 6-year-olds, 17-year-olds, and/or 40somethings when they overhear them, even sight unseen.)
Also, either Chandler LE (1) didn't ask the neighbors about the pool party; (2) did ask the neighbors, but they were stressed to keep quiet about it. (I feel we've seen a generic sentence in a MSM report saying neighbors were interviewed and had nothing to add, other than the general previous statements that the pool party had been disturbingly raucous. I could be wrong.)
RSBM
I like your post a lot. If I want to be charitable to Chad (I don't really, but) I would include a variation on your second explanation. Or maybe it's the fourth possible explanation. Someone raised to believe deeply in the supernatural, or who has an unwavering belief in the supernatural because it feels right, will then have trouble distinguishing between his imagination and what's real. It's not really insanity and it's not really dishonesty as a teller of the tale. I've seen this many times in acquaintances.
How about #5 - narrator's desire to embellish to make a better story?
In my experience, either impulse could take over; and it could be pushed by impetuses either sacred or profane, in the "it's possible to be both sincere and yet be sincerely wrong" vein.