Yes, it was a distraction, and that's why I think Nia didn't appear in it personally, but "true" things still showed up like the reminders of Nia and the Kamina who lives inside Simon.

And it was only symbolism for Nia's significant role in Simon's life, just as the real Kamina came to "show him the way." Her individuality and importance as a character is given plenty of light in episode 27.