Since Mr. Covington seems to be generally functional and coherent, I lean strongly toward the former interpretation.
It would be impossible of course to prove that Mr. Covington does not believe anything that he says, but we happen to have documentation that he has no compunction about false posturing. We have the words quoted from Mr. Covington's own mouth:
"We won't be lying to them about anything important."
(Click on an image to select it, then click again to enlarge it to a legible size.)
A little over a year later, in March 1989, Ben Klassen gave essentially the same assessment in the COTC's Racial Loyalty newsletter:
... [T]he same fellow who condemned Christianity a few years back and even now jokingly talks about Christ as “the dead Jew on a stick,” and has openly admitted any number of times that he himself doesn’t believe in all that Christian claptrap, now makes the official statement that his “movement” is a Christian Movement and no member is to distribute any “violently anti-Christian” (read C.O.T.C.) literature. How about a race-mixing Jehovah’s Witness tract, Harold? He, himself, is now even strongly considering becoming ordained as a Christian Identity minister. Would you believe?
Covington was making a big show of Christian faith in order to cultivate White Christian followers, even though he did not believe in their religion whatsoever. The fact that Covington really had contempt for White Christians became obvious years later when he (subtly) expressed that contempt in one of his novels. Pastor Martin Lindstedt complained about this in 2003 as follows:
I ended up asking about Covington back in 1998, when I was suspicious about being 'used' by appearing on Covington's 'Whitespeak' jewhoogruppen [Yahoo group]. Katya Lane ended up predicting, "Sooner or later you will grow tired of his lies." Well, I must have been stupid because I didn't figure out until reading Covington's latest self-published novel, "Swill of the Jayhawks" [Hill of the Ravens] that Covington regarded Christian Identity soldiers as nothing but cannonfodder to be given third-rate shitizenship, if that, in Covington's 'NorthWest Republic' of covingtonistas.[Martin Lindstedt, VNN Forum, 22 December 2003]