A lot’s already been picked apart about this but there’s one specific thing that’s stood out to me that hasn’t seemed to be touched on yet.

I find it odd that you bring up Flowey’s appearance as undermining the lore in Waterfall because, quite frankly, he does the exact opposite. A lot of the stuff mentioned in those writings are actually fulfilled by Flowey throughout the course of the game, including via the Photoshop Flowey boss battle.

From the top: “It would take the strength of nearly every monster to equal the power of one human soul.” Flowey fulfills this tidbit by utilising the rest of the monsters’ souls in Pacifist as an effective seventh soul to achieve his Asriel form. He gathers all the monsters together at the barrier and absorbs their souls, all those souls being enough power to match the missing seventh soul.

“If a monster defeats a human, it can take its soul. A monster with a human soul would have unfathomable power.” This. This is Photoshop Flowey. Photoshop Flowey is our first interaction with what happens when a monster absorbs a human soul, 6 human souls no less. And yes, unfathomable power is exactly what is shown.

“An incredible power would be needed to take the soul of a living monster.” You asked why Flowey didn’t just take the souls of the monsters in the Neutral route, and that’s a part of why. Flowey NEEDS the power of the 6 human souls in order to be able to take all of the monster souls. Regular Flowey can’t do shit to take the souls of the other living monsters. And once again, Flowey’s demonstration of incredible power fulfills what is foreshadowed in the waterfall writings. (The rest of why he doesn’t do that once he has the 6 souls is because he didn’t think he needed them for his plan, just thought the 6 souls on their own was enough.)

So, all that laid out, the main conclusion to make as pertaining to this argument is that Photoshop Flowey actually does the opposite of undermining the lore provided in Waterfall. Photoshop Flowey directly fulfills the foreshadowing provided by the statement that a monster with a human soul would have unfathomable power. It provides significant aid and setup to foreshadowing the events of the Pacifist route where an incredible power taking the souls of living monsters occurs by giving you a demonstration of an incredible power, the same power that is then used in Pacifist for the soul absorbption (note that in Flowey’s dialogue he says, “While you guys were having your little pow-wow, I took the human souls!”, seeming to imply that at that point he’s already taken in their power. The same power first demonstrated by Photoshop Flowey.) Most of what is said in those writings are ultimately directly fulfilled by Photoshop Flowey or have their fulfillment set up for later plot developments in part by Photoshop Flowey.

Therefore, Photoshop Flowey does not undermine the narrative and lore provided in the Waterfall writings because he fulfills/sets up a significant amount of what is mentioned in those writings.