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Analyzing The Whole Picture
Overall from my playthrough of the game, it is clear that Reika is in some sort of struggle with Iwakutsuki. The game is chock full of symbolism that explains the character's backgrounds and what got them to where they were by the end of the game. I am going to seperate this theory into two seperate parts: Reika's and Iwakutsuki's History.
Reika's history:
Getting straight to the point, Reika is probably a high school/college student/adult who lives in an apartment with Iwakutsuki. Reika is a victim of relentless abuse and stalking from Iwakutsuki along with her killing her friends. This can be shown by Reika showing remorse for some lost people, presumably friends. This can be backed up by looking in Iwakutsuki's campaign, where in one world Iwakustuki looks upon Reika hanging out with her friends, seperated from them and unable to interact, only to be attacked quickly after taking a glance at them and heading back out, possibly representing being rejected socially. Iwakutsuki's stalkers are also corrupted, scrambled looking version's of Reika's friends, possibly symbolising guilt pf doing something bad to said friends. Reika's campaign has a lot of portrayal of eyes, possibly representing insecurity of Reika due to stalking along with the daily social stresses of life. This can also be used to have some insights on Reika's personality. Reika is probably super insecure and fragile. More evidence that backs up the loss of Reika's friends is the ending, where Reika either get's killed by an invisible figure, probably Iwakutsuki, kills Iwakutsuki, or get's away from the house. Before one of these endings, Reika walks down a corridor spreaded with the bloody remains of her friends, and she meets Iwakutsuki at the end, and she get's killed by Iwakutsuki. Upon facing all her friends deaths and facing up to all of the times she and Iwakutsuki cross paths in the dreamworld, Reika gains the ability to move on from her friends deaths and get's away from her apartment in one ending. One major proof of this symbolism is the Eye-Teeth world. The teeth on the ground could represent abuse, since getting physically abused is often associated with getting a person's teeth knocked out, and the eyes on the teeth again resemble Reika's pain from Iwakutsuki's abuse. Reika also has an effect where her eyes are missing and he limbs are gouged out, and all she can do is merely shuffle around slowly and cry bloody tears. Reika might hate herself or judge, judging from effects turning her into goo and a bug, things often looked down as gross or yucky. At the ending, Reika killed Iwakutsuki due to her suffering, and killed herself afterwards due to overwhelming guilt.
Besides abuse, Reika might be interested in the occult, with a symbol close to the satanic symbol can be found in the area with the purple staircases along with there being a dagger, priest, and mask effects. The graffiti world and teeth world are also very gothic looking. Reika may also have some interest in machinery, judging from some of her machine-related effects to the circuitboard world.
The last area to consider is the purple dress lady found in the sewers. She might be a sister, relative, or friend to Reika that Reika looks fondly upon but doesn't see much, judging from the fact that she has a pleasant appearance, but is only present in one or two areas.
Iwakutsuki's History:
Iwakutsuki, judging from what we just covered over, murdered Reika (in one of the endings) and her friends. It's hard to explain, but she probably murdered them due to insanity (she's labled as a madman). However, there's something that caused her insanity. Iwakutsuki could also been a victim of social or physical abuse, judging from the abundance of blood and violent themes to the fact that a major part of Iwakutsuki's room is a closet, which is bloodstained in the dream world. Iwakutsuki's world seems to be falling apart and unstable (for example, the school and the world with the wiggly robot man in the background), which could be due to her decaying sanity. There's not alot of evidence to go by, but Iwakutsuki probably started stalking Reika due to seeing she had what she didn't: a good group of friends and a relatively stable social life. What caused Iwakutsuki to be socially outcasted is probalby hinted at her gothic appearance and the abundance of violence and blood in her dream world. I say Iwakutsuki was outcasted due to having violent tendancies towards others and strange interests. Iwakutsuki, with her anger, snapped one day, murdered Reika's friends, and locked Reika in her room to try and kill her at one point in the day.
Canon Ending: It depends on how you look at it. I'd say the best ending is cannon, with Reika going up against her abuse and not succumbing to it. It's a bright ending, something that Reika deserves after facing her fears in her dreams and standing up to Iwakutsuki.
Theory by Doomerzan, will repost if taken down unfairly due to a troll.