I think the distinction between Kayfabe and propaganda is that the audience knows and chooses to suspend disbelief of Kayfabe because it's engaging to them.
I like this article because I think Kayfabe is a much better explanation of certain societal tribes' mock battles, than a lack of intellect. I think propaganda is a poor theory for widespread misinformation, because if it were simply a lack of information, then giving correct information to the uninformed (e.g. wikipedia) would immediately rectify the problem.