If Bethesda (and MK) has chosen to make Vivec into what he is in all the lore about him: egocentric and somewhat mad, then this is what the godhead has wanted!
It might be hard to understand, but look at "The Many-Headed Talos", for example. Talos has the ability to transform all of Cyrodiil from a jungle into woodlands. Why? Because the godhead decided he could. How? By making the environment in Oblivion (the game) foresty and later writing "The Many-Headed Talos"! It was the will of the godhead that it would happen, and therefore, Talos could do it.
That is why I portrayed the godhead as a law of physics, one only has to accept that its there, it just is. There is no godhead this, godhead that.
Again, though, saying that the Godhead is an out-of-game force means there is other things outside it. The story behind the Godhead is that it made the universe inside its head by first splitting itself into two entities because there was nothing but it. And it still involves determinism in that you can't go against the wishes of the Godhead (also wrong, in splitting itself the Godhead supposedly relinquished control).
Personally, I think the greater crime would be to throw away CHIM in order to keep with the characterization than would be throwing away the characterization to keep CHIM. Why make it up if its all just going to be a lie? But then, I don't think they're incompatible.
I'll take deep characterization before making the universe the cheap and meaningless illusion of a mad god any day. There's a reason Link's awakening is my least favorite Zelda game: it was all a dream, it didn't happen, it was meaningless even in the parameters of it's own fiction. saying the universe is a dream just means it is all fake and pointless, something that is fiction within its own fiction. So I'd rather keep Vivec's character as well as those of everyone else instead of saying it all means nothing.