This is a good theory and ticks a lot of boxes, but I have a few reasons to believe that this isn't the case.
First things first, while I have some strong opinions about this deadend and I like to call the Eye dumb, I think that the dev introduced it more for lore exposition or even the "cool factor" and less to showcase what the MC would look like at level 5. In fact I think that level 5 MC will be way stronger. With that out of the way, these are my arguments:
1) While I'm not sure if it's a monsterification, the MC loses himself in the first deadend of the game, if he fights the cafe thugs without training. He unlocks two powers, the corpse consumption and his tail (a level 2 power). He is also controlled by his tail. While he still can reason, his tail is killing people left and right. This isn't very unlike to what happened to Deryl, athough it expressed itself differently and there was an evolution involved.
2) The Memory is capable of reading memories without touch or some other link, something that MC eventually managed to approximate at level 3 with Memory Echo. Xanthe says that past level 2, the superhuman can surpass the monster parent depending on how powerful it is. This may mean overall power, but it could also mean that they can improve on the abilities inherited.
3) I don't think that this is a normal monsterification. When Superhumans monsterify, they don't become their monster parents. They just change and lose a lot of their capacity for reason, at least the way we understand it as humans. This case is more like a possession. The being that flies around throwing pillars of tentacles, killing and consuming monsters etc, is the Eye, not the MC.
And my theory is this:
Monsterified superhumans can use whatever abilities their monster parent gave them assuming that they have enough power to use them. Through their evolutions, superhumans can surpass the monster parents and unlock new abilities, which are tied to their unique genetics and upbringing.
The Eye being the parent of both Body and Memory is fully capable of using the range of abilities that it's children can use. One reason it doesn't has to do with it's confusion due to the circumstances that brought it into existence and general irritation due to the environment which doesn't allow it to think clearly and continues to use whatever is familiar to the body it controls.
The other reason has to do with the dev not trying to be super consistent in the dead ends.
I definitely agree that level 5 MC will be much stronger than we are in this dead end, we can still gain new powers from our level 4 evolution after all. However, to your first point, corpse consumption and the tail could be argued as not being new powers. Corpse consumption would just be a more whole usage of our brain eating power we can use when we win the fight, and the tail only came out at our level 2 evolution because we noticed how our power has two focal points, the brain and the tailbone during the evolution trance. We may well have been able to construct the tail in our first evolution if we had noticed earlier, though at a very large consumption of power at that stage. To the second point, my understanding of that one is that it means in terms of pure power, not in abilities. To clarify, not everyone will have the full range of power that their monster has, and those powers may be different, like Oscars Red, Amber, and Green lights, but depending on the level of monster, the sooner that one will obtain power that can exceed their monster parent. Most but not all will likely exceed their monster parent's power by level 3, but those like MC, Alice, or any other Apostles close descendent will likely not be anywhere near close to that level of power. I do agree that this is an abnormal monsterfication, (if it even is one, as it's mentioned in the dead end that your body is on it's fifth evolution) as the MC is swallowed by his Origin and not just a monster version of himself.
My counter to your theory is this:
Monsterfied superhumans are capable of using whatever powers they had before they lost their sanity and became monsters. Their monster parent gives them a base to work with, and they branch off in new ways based on their unique genetic and psychological build, but never straying outside of what their foundation is. In other words, a superhuman with a monster parent that controls heat can control cold, but cannot control water like it does heat. This is because cold is just a lack of heat, whereas controlling water would require a completely different type of power.
The Eye is capable of connecting you directly to the Higher Plane, allowing you to forcefully obtain your level 5 evolution due to being in an evolutionary state, however,
you are no longer the psyche in control, it is The Eye. The Eye is desperate to reunite with the other being, as if it does not do that soon, it shall become unstable and lose it's ability to stay in our world. As such it uses it's powers in the most efficient way possible in order to quickly obtain the other being it needs to stay as a being capable of directly interfering with the world.
I do think your interpretation is an interesting one though.
