My read is that the back story for your "schema" -- remember when the term, along with "the unreliable narrator," and the "missing plot element" became big in artistic circles during the 1960's and 1970's? -- that schema realized by an increasingly unreliable director, with perhaps a missing plot element himself, should be generated by some previous personal humiliation, which the supposedly macho Hanaford was earlier put through by "The Girl" [or as the result of a humiliation discovered by her]. This conundrum is why the film-within-a-film is such a departure for the old womanizing (secretly "queer) director, why the producers of his previous Hemingwayesque blockbusers are so puzzled.
John Huston might well have bought into Welles' bleakly tragic satire, early on, as a penance for his own sins. Consider that Huston was a very guilt-ridden artist over the price a number of people in his pictures had to pay for the performances he encouraged them to give, performances and facts from his own life which he might rather have forgotten [but as a good artist, did not]. Recall, early in his young manhood [then, a writer] the girl he knocked down and killed when driving drunk (the reason dad Huston sent him to England). Or the earlier car accident he caused which cut the face and broke a tooth of Zita Johann, "the immortal Princess Anck-es-en-Amon" in THE MUMMY, and the estranged wife of John Houseman. There was also the story Huston told Michael Fitzgerald of a captain who kept saluting with the bloody stump of his arm the soldiers of his company as they went mostly to their deaths, trying to cross the Arno River in Italy, while Army Captain Huston was photographing similar scenes for his World War II training film, THE BATTLE OF SAN PIETRO. Or how shaken he was by the emotional toll paid by many of the War's survivors, which he recorded in LET THERE BE LIGHT. [Neither of the latter films were released for years after the War ended, and so, in a sense, they were in vain, substantially irrelevant for the participants (and their families]) who had made the sacrifices. Yet Huston would return to the subjects in two of his major failures, the heavily re-edited THE RED BADGE OF COURAGE and FREUD, (the former starting Audi Murphy, a genuine highly decorated Army hero, on a self-destructive acting career; the latter, continuing with a mixture of sorrow, frustration and contempt the process for Montgomery Clift begun in THE MISFITS). THE MISFITS, with its personal tragedies -- the final death of Arthur Miller's marriage to Marilyn Monroe; her increasing inability to learn lines as an actress, her end the next year by drug overdose; the heart attack which killed the aging Clark Gable a few weeks after taking part in a particularly strenuous horse roping sequence -- recalls Huston's bitter experience on THE UNFORGIVEN, another failure in the eyes of the critics. The production was crippled by an accident in which Audrey Hepburn, everyone's sweetheart, was thrown from a horse which she was riding bareback. She severely wrenched her back, causing her to be put on bed rest while the director shot around her, forced to wear a brace for the remainder of the picture. Not widely known at the time of the accident, she was several months pregnant, and shortly following the finish of the shoot, miscarried the child. For that reason, THE UNFORGIVEN was the only picture which Huston himself said he hated to think back upon.
Without going into the sadder aspects of Huston's family life (which nevertheless produced a couple of admirable third generation actors), a number of other tragic or bizarre aspects might be cited, the most characteristically sardonic of which was the miniature six shooters he gave as welcoming presents to his cast for NIGHT OF THE IGUANA on location in Puerta Vallarte. It was the kind of gesture Jake Hanaford might have made on the set of THE OTHER SIDE OF THE WIND.
And so, one does not have to look entirely at Welles' life and creations to find inspiration for THE OTHER SIDE OF THE WIND.