Just before Scout discovers his mother's murder, he pops one of the tainted Emesis pills—one of the side effects of these pills is hallucination. For a split second before it cuts to black, the Butcher is standing in Scout's home. Scout hasn't met the Butcher at this point, so would have no reason to hallucinate a stranger. Much more likely, the audience sees what's actually there, while Scout sees his old friend standing over his mother's corpse. Medic hallucinates a nightmare version of himself killing the poor woman, why can't Scout see the same?
Fritz sees a vision of "himself" murdering Scout's mom—this version is monstrous, with spiky teeth and blown-out eyes. Since the figure looks so nightmarish, it can't be a memory or another time jump—Fritz would look more as he normally does if that were the case. Instead, the guilt and horror of seeing his friend's mother horrifically decapitated, coupled with survivor's guilt ("What if I had gone inside after all? Could I have stopped it?") leads to the twisted conclusion that not being there to save Scout's Mother was tantamount to killing her himself.
Despite being one of the most cryptic characters in the movie, the Undertaker still plays a important role by manipulating events in order to expose the respawn machine and everyone involved.
Archibald and his foundation worked to achieve the impossible: to build a machine that could bring back the dead. They failed at first... Until an oddly charismatic fellow showed up, offering a way to make the machine work. He didn't ask for money, favors or anything in particular, only promising that he would come to collect his share years later. Archibald accepted the deal, creating the Respawn Machine and selling it to both Blutarch and Redmond, becoming incredibly rich in the process. Years went by, and their deal came to an end. The Undertaker could just collect Archibald's soul himself, but instead chose to indirectly pit the former mercenaries against each other, either due to being unable to directly interact with mortal affairs or to cause as much suffering as possible. And in the end, he succeeds. Archibald is killed, the Respawn Machine and the facility housing it goes up in flames, and everyone involved (except Doe) dies.
The Respawn Machine itself completely defies logic. During Jane Doe's brief stint inside of it, we're treated to a red glowing nightmare, filled by thousands and thousands of corpses being transported somewhere. It is very likely that the process of respawning takes such a toll on someone's sanity because they're exposed to Hell during the process, hence "It's eternity in there!".
Think about it. The Undertaker is heavily associated with death, from riding in a stolen hearse to dressing like a Plague Doctor. He also primarily appears around people who have killed before: Morneau presumably killed dozens of people for Archibald, Doe (or at least his original iteration) was a war veteran, and Ludwig murdered the Conagher brothers in retaliation for what they did to Jeremy. He's even seen playing chess with Ludwig in Doe's war flashback. It would also explain his lack of allegiance and provide a motive as to why he wants the briefcase - the Manns and Helix have been messing with the natural cycle of life for god knows how long, so now Death (as the Undertaker) is stepping in personally to resolve things by subtly manipulating events in order to bring down the conspiracy and restore balance.
It's already been established that the Conagher Slaughterhouse, and everything within the proximity of the Respawn Machine doesn't exactly align itself with reality. We also see how two different points in time can interact directly with each other, like the moment when a past version of Soldier throws a crowbar at his future self, or when Fritz stumbles upon a fissure in reality that leads to the conversation he and Scout were having earlier in the day, even directly affecting it by accidentally stumbling on a stack of videotapes. The reason Fritz doesn't remember having anything to do with the murders, the reason why the blood appears in his office, and the reason why Scout is so hostile to him when he comes to rescue him, isn't because he was in any sort of dissociative fugue state: it's because it really WASN'T him, but the future version of him from the ending of Emesis Blue comes back in time to commit the murders after going insane from the discovery that he was using Emesis diazepam the whole time. It's the reason Medic sees the nightmareish version of himself committing the murders, it wasn't a mania-prompted delusion but a glimpse into his future. We already know that Fritz has the ability to miraculously survive fatal wounds, such as the full-on shotgun blast he received from one of the Conagher Brothers and the bullet to the head he got when playing Russian Roulette with Soldier and the Spy, so it's entirely possible that Fritz survived the car crash at the end of the film. Maybe, after reconciling with the murderous part of himself at the end of the movie where he goes on a rampage across town, he returns to the Respawn facility (only the Conagher Slaughterhouse burns down in the end, we never know if the underground facility is destroyed) to go back in time to commit the murders he was always accused of out of a sick sense of irony, or to ensure that his past self would go through the traumatic events of Emesis Blue in order to become the person he always wanted to be.
The Respawn Machine works like the teleporter in that one episode of Doctor Who. It doesn't only create a copy of the body, but a copy of the soul. There are eight hundred thousand dead in the facility at least, making it the biggest mass grave on the planet by several orders of magnitude- and all of those ghosts combined are so powerful that they can warp time and space within their domain.
