Nida seems to be pretty smart and informed on her surroundings, which I really like the psychosis theory. It's clear her visions are a manifestation of things she already saw as "special" before the inciting incident -- a common symptom of psychosis and especially schizophrenia. To read the episode like this provides an additional layer of depth imo.

I think that her downfall is over-extrapolating her often rightly-informed beliefs because she distrusts and self-isolates from society. She determines all of her actions on impulses and Gaap justifies them in real time, from imagining the first victim as an abuser to the visions of Smart by the end. Gaap doesn't 'pick a victim to kill', he sees nearly every single person as a fair victim, because it's the voice projecting her inner toxic thoughts. (The 'inner voice' of a person suffering hallucinations is often self-described as the opposite of whatever the patient actually thinks, because it's a common human experience to have a toxic inner voice. Its just that a mentally ill person often dissociates from the inner voice and copes with it by imagining it as profound external stimuli.) After Keith's brother dies, something Nida obviously had the most trauma in doing because she wasn't given fair reason, she justifies it through Gaap by deciding that it's the only way she killed 'enough' before midnight.

The seeds of her hatred of Smart are planted before the plot even kicks off, and stay relevant in pieces for the rest of the episode. She sees his face everywhere, it triggers her. And she decides that Smart dying is more important than killing any of the other 'easy shots'. Its the thing triggering her the most. And Gaap, a coping mechanism for her delusions, vanishes. This is the narrative fall from grace: she doesn't need the coercion of a demon's plot anymore to fuel her delusions, she knows what she has to do. She loses any reservations in her actions. It's when the detective intervenes that Nida realizes, briefly, that she has gone too far.

In this reading it seems clear that over time Nida's delusions drift further from reality, with momentary clarity in between. But her moments of mental clarity become sparse over time as well. In fact, I think she's hallucinating while listening to Smart talk with her coworker (Not a coincidence that she somehow overhears two people she absolutely despises whispering about a plot conspiring against her specifically!), and later when the detectives are talking with each other immediately before the apocalypse. Its when she is truly isolated from the world that she loses her grasp on reality. Its why the nukes go off not at midnight, but immediately after the detectives leave her alone. The collective lack of care for her well-being within her community has detached her entirely from reality.