Thanks u/koopcl for your considered thoughts on all of that! I don't know enough about the game to be able to offer a solid counterpoint to most of what you've said. In terms of offering any credence to my admittedly 'out there' theory that we're in Bill's mind, my understanding is that although Joel has met Bill in the game, Joel hasn't met Frank. I wasn't serious about the cat - that was clutching at straws!
I don't doubt that Bill and Joel know one another, but I'm questioning whether them getting together to eat was a real thing, or imagined. You're right that it all falls down in terms of the interactions before that episode, if Bill was infected - that wouldn't make a lot (or any) sense. If he was losing his mind however, then it makes more sense.
I read this about an hour ago.
"The way I’ve been describing this change to people is that, if the somewhat delusional Bill from the game had imagined what he thought his and Frank’s life together was like, his fantasies might have been like what we saw in the show. It’s a totally alternate take that still feels like it belongs in the story."
So perhaps Bill wasn't infected at all, but the unsettling vibe that I was getting was that what we were seeing wasn't actually happening. The show runners have said that although the game could be played right through from start to finish, they have to give a beginning, middle and end to each episode - they need an arc that draws you in and holds you. It's possible that everything in that one episode is self-contained and that when the next episode starts, we're no longer in the dream state.
I think the production team are clever enough to draw us in and suddenly reveal that we've made some big assumptions, especially for those that have played the game a lot and know the story well. The whole point of a dystopian story is to unsettle - there's no better way to do that, than to present you with a reality that you accept (perhaps without question), when in fact you've you've just been presented with enough to make something appear credible, but there's an alternative truth that's deeper at play.
I think it's too early in the series for a complete deviation from the main arc, unless there's a good reason for it. I think there has to be another reason for that episode.