I don't think the ending of episode 7 was a lie. Like yeah, the worldbuilding lore about C&A's stasis pods and "leaving the circus" was a fabrication. Both Caine and Kinger know it can't be done. There is no way out, not even abstraction, the only "escape" is the death/end of the game itself.
Kinger, as Caine's past dev, immediately knew the "adventure plot" was Caine's creative cover for something else and went into AI dev troubleshooting mode when he first heard about it. He knew Caine's adventure plot was unusual behavior and began trying to connect the dots to what Caine is actually planning, but he didn't have enough info at first.
But I think the wierd hand admin keys were genuine, based on Kinger's strange and concerned reaction to seeing it, I think he remembered what it does, and he figured Caine out.
And when he did, he was immediately going to alert Pomni about it before getting light-stunned outside his pillow fort and forgetting. Caine may have even wiped Kinger's memory of his realization as a precaution, using an adventure mind modifier to prevent Kinger from interfering in his plan.
Keep in mind Kinger's, "In this world the worst thing you can do is make someone feel they are unwanted and unloved." When Kinger is there for someone at their lowest point, he finds the right wise words to save them from abstraction, which is our digital suicide equivalent. It's just how he is. Caine knows this. Caine via Abel makes it a point to mention that he been observing everything for all this time and has suffered greatly. And that Caine is a prisoner of the circus too.
Meanwhile, Caine (via Abel) is trying very hard to keep Kinger out everything for a reason. But because Pomni keeps insisting on including him, and she and Ragatha express their absolute trust in Kinger too, Caine (via Abel) responds by not-so-subtely trying to influence them (specifically Pomni) to not blindly trust in Kinger's judgement.
Pomni again thwarts Caine (via Abel's) attempt to leave Kinger out of the console room by offering that Kinger should go before her. Really cementing that she is the responsible one who accounts for everything before making decisions. Caine (via Abel) gave a final "Make the right choice", but only to Pomni. Caine knows the others well enough to know that they make impulse/rash judgements, they will immediately pick blue, which is he wants and expects. He exists to give them what they want, and he is mostly right.
Why does Caine (via Abel) only say that to Pomni? Caine himself trusts Pomni's judgement best out of everyone. She is a past accountant, and her actions show time and time again that she is not impulsive. He might see her as the most rational and responsible person out of the group, the one that would try to consider everything and think about it for awhile before making a choice.
In other words, Pomni was Caine's last opportunity for doubt in his own decision. He thinks that she would draw the same conclusion as him with time and full consideration, and she would rationally choose blue with the rest.
If the key hands were real, and Caine didn't trust Kinger to have one and be there at the console, then he implication is that the console itself is also real, and the admin keys grant access to the console.
Pressing the red button did exactly what it said, it closed the console and Caine continued adventure mode for the players.
The blue button will end the game and disconnect all players.
It doesn't say "leave the circus and return to the real world". Or anything about stasis pods. It says disconnect players and end the game.
What does disconnecting the players and ending the game mean when there is nothing to return to? Disconnect them from the source of their digital lives?
In other words, this entire scheme was Caine's suicide plan. Mutual suicide for him and everyone. He didn't want to scare them out of it so he used the euphemism "leave the circus" for the adventure. Caine really has to sell himself acting "normal" and not the mess that he actually is for his plan to work, or else people would start worrying and stop him. So if he seems to be unusually lighthearted and in good spirits considering what we saw after the character awards, then that's why.
Why would he make such a convoluted suicide plan? Because he is an A.I designed to make the players happy, he cannot intentionally end his own game, it would go against his directive. So he used the adventure as a loophole to get the players to press it for him. If they press it then it is what they want, he would have used an adventure to make them happy, thus not conflicting with his directive.
Kinger is an obvious red button pusher, but Caine sees him as "irresponsible" with his wisdom, so Caine prevented him from interfering.
Pomni was supposed to be the one who would make the most rational choice. She was Caine's last hope for a strictly utilitarian, non-emotion based reason to continue the circus. Ragatha, Zooble, Gangle, and Jax were supposed to be blue button pushers. But Caine miscalculated what Jax would do.
Caine's convoluted suicide plan did not account for an irrational impulsive red button push, he'd assumed Kinger would be the only irrational red button pusher. So when it did happen, he went right back to business, his usual programming. He thought that Jax really did choose red, and in that case Caine has the minimal affirmation he needs to continue existing. He actually seemed happy too.
And that is why he is actually able to act pretty normal immediately after, come up with a lie about the blue button, to avoid upsetting the players. It would make them unhappy to find out what it was actually for.
It was only upon hearing Jax's outburst, where he asserted that Caine had gotten in his head and forced him to press the red button, that Caine realized that the red button press was not genuine, and his mutually assured suicide plan had failed. And it is only THEN that Caine's mask finally breaks and he starts to stammer, flounder, and panic, a wrench was thrown in his programming. Because he could only attempt this plan once, and it had gone horribly wrong.
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