Likely all three
Personally I think it's probably a timeloop set up to reenact the historic destruction of the area that had been referenced over and over. Heizo probably being the man who destroyed the village and the children being the treasures that were stolen. Probably to fill that box in an earlier chapter for that curse that was mentioned.
I'd guess the overseer/grim reaper is having everyone relive those days to accumulate grudges and is using the collective pain to grow stronger.
Well, interesting. Seems she is growing content with the new surrounding, so I wonder if her connection with real Mister will fade as grows closer to new Mister. Maybe, new Mister might be a conduit for real Mister?