Maybe it is the natural tendency of any court to focus inward so that the reality for them becomes the reality of court life. It happened with Louis XIII and XIV. They are the great examples of it. Louis the XIV's court, for instance, had it in spades. Marie Antoinette is supposed to have said when informed the people were starving, "Let them eat cake!" But what she really said was something like they should try brioche which is a delicate type of bread or cake that she and the court ate. In other words, they should try eating what I eat when I am hungry. She lived in a complete fantasy world unrelated to any reality. And when things got bad and they tried to escape, the whole thing was treated as some sort of game they might play in the parlor rooms of the palace. They were recognized and their way blocked by revolutionaries. In the end, that fantasy world came butt up against the reality of the guillotine.
The same thing could be said for Nicholas' court. And this is not for tzars and tzarinas and sun kings only. The same thing happens in the administration of democratically elected presidents. The extreme example is Nixon, but then you have Kennedy's Bay of Pigs which was a response to the dynamics in the administration more than it was to the reality on the ground. And there are other examples.
But the same thing is true of big corporations. How much time is spent fighting the fires of office politics as opposed to doing the work of the company? Glen Reynolds makes this point:
...In a small organization, people deal mostly with customers and suppliers. They get ahead mostly by making both (but especially the customers) happy. In big organizations, people mostly deal with other people within the organization, and they get ahead mostly by making those people happy. Pleasing customers is a way to get ahead only to the extent that it also pleases the bosses, and if you have to choose whom to please, you're better off pleasing your boss than your customer.
So it happens everywhere. Does that fact let the Kremlin off the hook? No because the extent of the unreality suggests a certain willfulness about it. And the potential for real mischief is a lot greater than it is with others. To have the Soviet era paranoia like they do in an age when the evils of that system are clear, seems to have more to do with the fact that they prefer it rather than that they are forced to it by circumstances or that it reflects some sort of reality. It hearkens back to the good old days of empire. How satisfying that is.
Anyway, these things tend to come up against reality eventually. The question is what form will that eventually take?