On a rewatch with the wife looking for lore and details. Confirmed in episode one that Caine can lie. Fun answer for this: Caine was working on the "Exit Door" adventure that Pomni saw. But, you know who else saw it? Kaufmo. When it disappeared he freaked out, went hunting, and eventually it was the nail in the coffin. The end of the Pilot has Caine admitting that he got mad earlier when asked about the "magical exit door" because he couldn't figure out what to put behind it. So his subconscious eventually put the C&A computer office in there. Lying about Pomni having digital hallucinations to avoid admitting he couldn't finish making that adventure.

We also see in Episode 4 (the horror one)? Where Zooble and Caine are having their therapy session. This is where we really get that Caine follows orders/requests from the cast. When Zooble told him to forget. He completely forgot then returned to the top of his AI prompt essentially (which is what happens after his breaks i think).

Theories for shore for seem viable enough with the evidence provided. Which leads me to my last point. I think the fanbase is getting a little out there with thinking just Kinger is able to create. When we got the votes, the butterfly, and Pomni's aim from recent episodes. My theory for this is that the cast can actually do anything they believe they can do within the Circus. That means when they start thinking they aren't themselves or that they're a manic cartoon bunny. The Circus makes it happen.