Scrdest--
That is called "Hanging a lantern on it".
The original assyrian fish god was not the kind of eldritch horror that lovecraft spun it as. That's why he "hung a lantern on it", mentioned said scholar being incredulous (and rightly so) about said deity being an eldritch abomination, and just went on with his story.
Those that are familiar with that deity would have had their suspension of disbelief punctured-- hence, hanging the lantern.
*makes raspberry noises*
That is not Lampshade Hanging. Lampshade Hanging would be the scholar saying 'Sure, sure, but the Assyrian Dagon was actually kind of nothing like what you've seen.'. You're scrambling to save your argument.
If something as minor as a reimagining of one fictional character as another fictional character punctures your suspension of disbelief, the bookshelf with Non-Fiction is on the left. No author feels the need to constantly wink at the readers, saying 'I made up the story. In, like, my own head. Geddit? Geddit? It's not real at all!' unless he has an extremely rare and weird, possibly debilitating neurological disorder.
Lampshade hanging is used to alleviate the audience's disbelief in plot
contrivancies, not their disbelief in the plot
itself.
The main character discovering the Plot Device is in the hands of his secret twin brother he never knew but bumped into on the street while a freak gust of wind blasted an old newspaper documenting the births in the very hospital he was born on the exact same day is something that warrants a lampshading. Another main character of another story finding out he's a wizard and going to a magicool school is not something that warrants a lampshading 'because we all know wizards are not real!'.
Likewise, unless you routinely hang out with ancient gods, in which case BURN THE WITCH!, Dagon actually being an eldritch abomination in-universe is not something that warrants a lampshading; Winston Churchill being an eldritch, non-humanoid, non-cloaked abomination would warrant it ('You'd think someone would have noticed, but apparently we somehow missed it the entire time!').
*makes watermelon noises*