The muffins

Yes, they did have hallucinogens in them. That is my point of view on it.

The crazy cult lieutenant actually mentioned something to the girl. Saying they were "addictive".

And for all the people in the cult to start seeing "signs" that demons were coming it would make sense that they saw them because they were eating the laced muffins.

I really wish they had gone into more detail on the muffins.

When I came to the DB I was surprised to see how many people thought the ending was ambiguous.

I thought it was pretty clear:

The muffins were drugged
There was no apocalypse
There is NO SUCH THING as demons!!!

This was all part of the fruity cult members plan. Imagine those muffin baskets at a few dozen companies, hospitals, TV/Radio stations around the city. Combined with a couple hundred brainwashed cult members, you could pull off a minor scale apocalypse for one night.

The hallucinogenic muffin conclusion is unequivocally correct, in my opinion. Although I did entirely miss the connection in my viewing, a review after reading your postings led to noticing that the envelope to Vivian on subway near the intro had the text "clavicep purpurea" and "ergot" written upon it.

Clavicep purea is a ergot producing fungus that grows on rye (a chief ingredient in Whiskey and some BREADS). The most well known symptom of ergotism is LSD like hallucinations and psychoses(i.e. the cult's belief that its the end of the world and the witnessing of "God's signs"). Another symptom of ergotism (ergot poisoning) is convulsions (note the seizure of one of the cult members attributed to possession in the scene where Frank casts doubt). Another Symptom is desquamation(shedding of skin), this is seen as the bodies are cast away and give birth to demons. Ergot poisoning (as well as other hallucinogens such as the belladonna plant) are commonly associated with witches/bewitchment (note the use of the term "bewitched me" during the second attempted rape scene). Also in the same scene note the talk about having to take a "major dump" between two of the characters that had consumed the muffins (although this connection is harder to make, another symptom of ergotism is gastrointestinal disturbance, including diarrhea)

Interestingly, hallucinogenic drugs have also been reported to aid in brainwashing by making one more susceptible to suggestions. The American CIA (fruitlessly) studied LSD as a possible method for brainwashing because they feared that the Soviets had the ability to brainwash American soldiers using unknown and highly advanced understandings of the human mind (in reality, the Soviets were never capable of this feat). Research the MKULTRA experiments for more information on the topic. This would fit the cult members brainwashing and suggests that some of the cult members hadn't eaten the muffins and were more resistant to brainwashing.

Also to suggest the events were purely mental, reference the literature in the beginning story. The first was titled "Hear the Voice" (both a religious reference and a simultaneous reference to madness), this was dropped by Vivian. Note that Josh? was carrying Carl Sagan's (absolutely wonderful) "Demon Haunted World", a criticism of ignorance and anti-scientific spirit. In his book on promoting science as "the candle in the darkness", Sagan points out the dangers of anti-scientific attitudes induced by belief in religion and other paranormal forces. The presence of Sagan's book in the movie seems intended to warn viewers of the dangers of blind indoctrination and openly anti-scientific attitudes (some suggest that the Salem Witch Trials were the result of ergot poisoning, I however, am doubtful).

Edit: I just thought to add that William Burroughs in one of his tomes ("Naked Lunch", "Junkie", or "Nova Express) wrote a few lines about LSD not being effective on the already psychotic because their world was already similar to that of an LSD trip. Burroughs proposed LSD (based on someone else's research, I presume) as a possible treatment for schizophrenia in particular. Note that the psychotic cult member (the blonde "wannabe rapist") self-mutilates among the final scenes (a sign of his psychoses). His not seeing the signs of God like everyone else may be an indication that he was already mad and therefore not witnessing events as any sort of "unusual".

In the opening scene on the subway car, the large white envelope says (at first) "To Karen claviceps purpurea ergot."

I personally think so think so- Patrick also taunts one of them about the "delicious muffinss" and how they're "almost addictive", and the metro worker says his wife has been feeding him nothing but muffins for days- but I liked how it never actually came right out and told us, and he gives nothing away in the commentary either. It's one of the few horror films where ambiguity actually works for it.
I just rewatched it today and I think it's a great horror with a nice sense of unpredictability about it and a creepy tone, despite having action elements to it, a rare combination and it worked.
But I personally think it was mass hysteria brought on by the laced muffins.

"Hey, look at that! She's not crazy, she's being chased by a cheetah!"

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