This is sounding great! I also preferred the idea to make the Mortis stuff more ambiguous and dreamlike. I love that you brought up David Lynch! Lol, why not have fun with this episode? Make it feel like the Black Lodge.

I was actually going to say a similar thing, that cutting stuff and making transitions between places and time a little confusing might be an advantage that adds to the dreamlike nature of the episode.

Cutting scenes with just the Mortis gods and only showing the POVs of only our heroes is a great idea.

I might try to rewatch the episodes and see if I can add ideas to it, but I like everything you have in mind so far!