I'd almost call this a strategy to divert attention from the Hippos. In any other game, I'd be a Lynch worthy offence.
Then again, it's all incredibly confusing and I'm not sure about the Hippos being the scum either. We have no evidence of the Hippos, except outside the game. We've at least seen Undead in a player, plus in the night and dawn messages. And there may still be some Omnians hiding in the dark. This might point to several factions, each working for themselves, or the Hippos being one giant red herring. Plus maybe one of two free agents. As mentioned: in-world, either the Omnians and the Undead are perfect candidates for a Cult.
(The Hippos don't exist in the books - at least Google doesn't turn anything up, except for the hippos in the Ankh-Morpork flag being a symbol for the city. Dwarves seem to me to be just like other people: some good, some bad, many stupid.)
Good compilation of evidence though. I think you're missing the comment Yesterday (I have no idea who, and am too lazy (and at work) to look it up), that it'd be like Pratchett to have Dwarves living in Ankh-Morpork for so long that they consider themselves native and can therefore join the Hippos. This might suggest why they have access to Dwarfbread (I had never heard of the phenomenon before, is this mentioned often in the books? Is it difficult to get your hands on?).
I do have to point out that the events, and the confusion on setting, is seemingly stopping people from Voting and thereby from going forward. Getting a second Day with No-Lynch might get us in big trouble. Is there anybody who will either Vote with me, or will propose an alternative? I'm willing to Lynch Stephen if that solves problems. Just as long as we get some more info.