An interesting bit from LegoTechnic from MWAwiki on the nature of ONI and confusion they sow:
Quote Originally Posted by LegoTechnic
Something to keep in mind is that the basic premise of the event is that Shiho is being fooled by the monsters, and that the "oni" she is protecting aren't what she thinks they are, and are using her. They fit the general physical description being large, horned demons, so you can easily spin it as all being Shiho's misunderstanding, which is how you rationalize your "rescuing" her.

Regardless the translation is what it is. She is a priestess of an oni-worshipping shrine. It's just these are probably best thought of as oni-impersonators, which the Prince and army apparently realized on sight