The problem with this episode is first that we don’t have a reliable narrator with the way it was shown. We have living and dead characters shown as a Funny July 4th Didn’t Set Me Free Juneteenth Is My Independence Day t-Shirt of Liz’s mind and imagination. We have no idea what Red said out loud because we never hear it. There’s no way that one person can know all of those points of view to even convey that story to Liz.
So the whole episode revolves around Liz’s broken mind, and look at all of the things that I pointed out above that are wrong with it. She has a history of being wrong. Her point of view is always wrong. For all we know, Red was telling her one story and she is producing another in her mind.