Utterly Mad

That works. Mabye make the first hour or so of the game out as a typical cartoony adventure, and then get.... Weird. Also, Jumpscares are a no for Lovecraft. Its a subtle scare at first.
Hmmmm
Wait, I know a lot of the Deities in Lovecrafts works have very set in stone spellings (Gnarly, Hastur), but a big point he makes is that most names are just spelled close to how they sound, so changing spellings around might keep the suspense up. Cthulhu becomes Chutuhlo, Mi-Ho becomes Mehgoh, Shoggoth becomes Shughoth, Cythlla becomes Citalluh, Shub Niggruth becomes Shebnigroth, all kinds of things like that. Remember, the protagonist does not know the spelling, only the whispered named in inhumane tones.

And since most of us here are perfectionists with a elitist attitude love for horror. I can see this game happening.

Also if there are going to be any jumpscares (which I'm really against), I want them to be PT styled, out of nowhere, unexpected, and violently in your face. No build up, just them appearing at you and you have to deal with the problem. But I'd save that for the Deepones ambushing you.