I find my mind wandering back to Bloodborne, and thinking about how bits of it would work as RPG plots.
In particular the idea of adapting the atrocities of the Old Hunters.
Basic primer for those not familiar with Bloodborne and the Lovecraftian stuff in it; The scholars of the College of Byrgenwerth sought to ascend to a higher state of being through enlightenment, study and self discovery. To this end they trained a group of warrior scholars called hunters to delve into the places in their world that had been touched by eldritch powers, in order to to find knowledge that could further their goal of enlightenment. At some point a group of these hunters were sent to a fishing hamlet that was suspected to be influenced by an eldritch god called a Great One. As part of their investigation they vivsected, butchered and experimented the people of the village, to search for physical changes caused by the presence of the Great One, and ultimately found and murdered the Great One who was pregnant at the time. These acts lead to the hunters and their successors being cursed, and trapped in a nightmarish recreation of these events maintained by the unborn child of the Great One when they died.
So, taking the elements that could work in an RPG format, the college seeking to find eldritch knowledge at any cost, the fishing hamlet, the influence of eldritch beings, potentially the nightmare where reality warps.
The players being murderous scholars is probably a step most would be unwilling to take, so they should probably be present for other reasons, relegating the scholar to an NPC. Probably better as just one or two rather than a larger group, because I feel like having too many would detract from the eldritch aspects of things. So let's say one scholar, there on false pretenses in order to observe the locals with the ultimate intention of abducting and vivisecting them to check if they really are under the influence of something unnatural.
The hamlet itself is a good setting, small, contained, potentially remote, inherently evokes the ocean and the mystery and wonder it involves. So let's say the hamlet is partly corrupted into worshipping the eldritch being involved, and there are physical changes taking place. Not super obvious ones, but more subtle things like skin becoming paler and thinner, eyes more watery and a few strange growths here and there inside the body. They're not bad by any means, the eldritch forces aren't evil, just weird and unnatural.
Eldritch beings, the real meat and potatoes of Bloodborne, and other Lovecraftian material. I think an eldritch entity of some sort basically has to be kept in translating the idea to an RPG, but I'm not sure how much agency it should have. To an extent I lean towards less is more, the entity is present for reasons mortals don't really get and that it can't change or explain to others, and it's not deliberately doing anything to the hamlet. The mere presence of this being is affecting the locals in various ways, making them mutate and go slightly insane. Not sure if I would keep it being pregnant like Kos from Bloodborne was, but it's certainly a good way to emphasise the real horror of the scholars when one tries to cut a pregnant god open to study the foetus they can pull from it in search of a way to become a god themselves.
As for the nightmare, sadly I think it only really fits in the context of being around after the events have taken place, but the core idea of reality being twisted and warped would work as a phenomena that happens when you get close to the eldritch god. Earth, sea and sky warp and weave into strange and unnatural arrangements as higher dimensions intrude upon the mortal world in the presence of the divine.