It's not as bad as it looks folks. No need to break out the outright denial just yet. It is somewhat counter productive even as people who created the statue (be it the actual artist or the Crimson Scars) must have had some line of thought in creating a statue.
I'll preface this with an earlier explanation. It doesn't go very deep, but I'll try to clarify and elaborate on specific assertions on request.
Sithis has been worked on by several designers at different times. In Daggerfall Sithis was just another god, coincidently the patron of the Dark Brotherhood. Emil thought of Sithis as Dark version of God with matching virgin and child. MK though depicted Sithis as a fundamental force.
The connection between the two is a philosophy class gone wrong. Source of Chaos explains the relation. Now the Statue of Sithis gives good evidence to show that Sithis is embodied by Lorkhan. Which metaphysically speaking, has always been a given fact. In this case the connection with death works through the creation of Mundus, with Mundus Lorkhan brought mortality back to the Aurbis. Immortal gods could die again as they did before the dawn of time.
This also rationalizes the idea of Mephala as the Nightmother as only together with Lorkhan she can be the mother of Murder.
So it's possible to represent Death through Lorkhan. While Death does not imply half of everything in excistence as Sithis does, it does cover that which the Dark Brotherhood is worshipping. This means that conflict is not between Sithis, Sithis and Sithis but rather between the Cult of Lachance and the Cult of the Crimson Scars.
Lachance sees Death as a fundamental force and as such does not give it a physical representation. The Crimson Scars apparently have a more anthropomorphic vision and represent Death through Lorkhan. Both are valid visions, though it can be said that the Crimson Scars are more accurate.
So the only actual conflict here is between the believes of different cults dedicated to Murder. If only the cults of the Nine received this much attention..... <_<