OKAY we know that there is at least one movie inside the movie. You might even add another one if you include the music-video part, when the MC goes to the porn & glamour basement. Which gives you (short) movie inside a movie, that is inside the movie you're watching. So yeah, I get the fact that at least 90% of what we watch is actually a movie being shot, it's the second layer of the script.
Now let's talk about the plot in that movie being shot (the movie inside the movie). There are at least two interpretations of the scenario, and I can't decide which one holds best. 1) The simple version : the MC gets framed for the crime itself, or probably is just manipulated in order to see an Indian killing the woman. The aim is that the real killer ("friend" of the MC, husband of the woman) gets his alibi and does not get caught for the crime he actually carried out. This theory is clearly explained by the MC himself to Holly when she is at his home.
2) The afterthought version : the MC is a "conspiracy nut" (quoting the police officer here). Nothing of the previous version is really true. What it means is that the Indian does not exist (or at least that the scene towards the end, when Holly is burried, when the MC fights the Indian who is finally thrown in the river) never happened. This version would also explain why the scene in which the Indian was faking to repair some equipment near the house is not consistent with the Indian being the actual husband. Also why would the husband not hire someone to do the dirty job instead of him? And why would the husband own a huge saucerful in front of his wife's apartment? And how to explain that totally unreal scene in which the MC is kissing intensely the wife in the beach? Is she so desperate for sex? If Holly is dancing instead of the real wife, where does the real wife go late at night? How does Holly get in the apartment if the husband himself does not have the key (he had to steal it after stalking the wife in his Indian disguise). On the day of the crime, why Holly did not show up for doing her usual dance, how did she get informed that on that specific day she didn't have to make the performance? How did Holly end up right next to a hole, meant to burry someone in the fight scene around the end?
The main problem is this one: in order to have a body double, some level of cooperation is necessary (just like in the end when the director is illustrating the concept of his movie through the porn shooting, in which two girls are actually acting, but the viewer thinks that it's actually the same person). Basically my point is that Holly cannot realistically play the body double without the real person voluntarily playing along with the plan. But on the other hand, if you think not in terms of coherence but in terms of what is "possible" (certainly not "plausible"), just technically possible, all the questions raised above can be addressed without breaking any storyline logic, without raising any obvious contradiction. Strictly speaking, there are no plotholes, but only unlikely events or events that need extra planning that has not been shown in the movie (but which is potentially realized by the characters, especially the main antagonist).
But after a second thorough afterthought, it's the second version that predominates. Because the second is mainly destructive: okay, if the MC is a nut and the "main" theory (the conspiracy being real) does not hold, what does then? Who killed the wife? Did she even die or was all this just his imagination? Did she even EXIST? There is no end to it. If the husband did not offer to the MC to stay in that apartment for guaranteeing his inocence, why would he let the apartment to him in the first place, that seemed too "louche" from the beginning? The first version explains well the reason, but if we go with the second version, this question (and a lot more) remain unanswered.
I guess I need to see the movie a second time, in order to clarify these questions... At least you know that you're in front of a great movie when you're totally into it, and when different conflicting interpretations can be explored.