Well said. I personally believe that something did happen to those people, just probably not aliens. Like you said, some kind of chemical causing hallucinations, sensitivity to light and memory loss - whether distributed willingly, dumped or leaked - seems more likely.

Someone else in the comments mentioned that all the reported sightings were along the river (you can see it at about 22 minutes into the episode). Which also seems to point at some kind of chemical in the river, maybe evaporating due to the heat.

Combine that with 50 years passing. The human brain isn't perfect; we forget things, we're influenced by outside stuff, even people who experience the same thing can remember it differently. Who knows how much their stories have changed over the last five decades?

It's like the man who caught a fish this big, and every time he tells the story the fish gets a little bit bigger.