Did Episode 5 of Agatha All Along Really Happen?

There's a wild theory out there, but one that the more I think about it could make more sense. We know from the trailers that some of the elements of the show are that we haven't seen. The very Wizard of Oz scene, the teen asking Agatha why she lets the other witches say bad things about her. But how do they all work after Agatha All Along Episode 5 left us where it did. I have a theory on that, it's big, but could it be right?
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[@zenithquasar9623]

My theory was Lilia actually hasn't woken up, but is foreseeing! And to me, Jen and Lilia being thrown into the mud made me believe in this theory more. However, there are 2 reasons I hate this theory:
1. I hate fake stakes, fake deaths etc. in shows - so, one of my favourite shows to have that would be so disappointing for me (unless they manage to make it pay off, aside from it just being a shock value thing)
2. The way they have shot the episode, it doesn't feel just from Lilia's perspective, like there are bits with Agatha. For a vision, I'd think they'd focus on what Lilia would see, not character moments where Agatha looks at the power she has stolen from Alice, for example.

[@10MinMarvel]

I get that, I don't mind fake stakes if they then need to struggle to overcome those stakes. How do you avoid it becoming a self-fulfilling prophecy. But I think that the newest teaser for Agatha All Along helps put this theory to rest. But does open up a few new questions.