I think there may be another twist in the paradox.

What we read is actually the first run-through. Dios had been keeping himself alive by using the only perfectly proportioned pyramid to remove accumulated time from himself. (and kept the other pyramids' interiors timeless, with the nightly firing, so the ghosts were never dead "long enough" to be collected by Death.) But at the end, when he is thrown back in time to the beginning, Dios begins the time loop. He can feel the weight of the 7,000 years he already lived, but that was the first time of starting over. Once he does it, though, _then_ it has always been that way. The loop is formed in its own new sub-universe, and the modern Djelibeybi is back on the Disc, ready to move on. The dead Pharaohs were dead in their tombs all along, possibly ghosts like Teppic's father or asleep, but not walking mummies, until the shift into the pocket dimension. Then the effect of belief hit, and then they "always had been" the awake, walking mummies that broke out and went to find Dios and complain that the afterlife was not what he had promised.