Sort of, the games are notorious for leaving things ambiguous and open to interpretation. Usually it reflects the protagonist's mindset as they struggle to stay sane. That said it could be all about usual teen-girl insecurities ("do my friends really like me or are they just pretending?") and what happens in the dream world explicitly doesn't carry over to the waking realm, at least outside of affecting the protagonist's mind. One of them (Rinko) is admittedly kind of a bitch but burning her alive is absolutely a step too far. It's really just the sociopathic fantasies showing Hinako is becoming a STRONG INDEPENDENT WAHMEN - the game railroads you into this path, kind of odd for the SH series, you don't even get the choice to be a classical anime gf. And the more (explicitly and literally) demonic Hinako becomes is shown as "growing up" and "asserting her independence" because conforming to Japan's expectation of women is only ever portrayed as something evil and oppressive.

No need for EL checks on whoever came up with this, the reek of semitic rat claws is evident in every part of this tripe. "Traditions are dumb and lame! Destroy what your ancestors worked for and be an insufferable cunt to the point of literal sociopathy instead!" Fuck me at least Hatred knew on some level it was a piss take.