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Wagner opened fire on Russian forces. Shot down helicopters and apparently at least one transport plane. That's a lot for just playacting. No pretense would be needed to replace a general in wartime. It's a common occurrence throughout history, and Putin wouldn't need an excuse either way, since he answers to no one in the Russian government. As to the statement that neither Putin nor Prigozhin are stupid... Well this entire conflict has provided an enormous amount of evidence to the contrary.

It makes both Putin and Prigozhin look bad though. Would they go through this damage to their reputations and prospects just for that? And couldn't Putin just have fired those guys without going through some elaborate pantomime first?

I think this is legitimately the commander of the most elite force being fed up that his men are dying in a losing war and his recommendations falling on deaf ears. His "I need ammo" video from a few weeks ago certainly wasn't part of some grand masquerade either, the city's supply lines were just destroyed by Ukrainian artillery.

He's not demanding Putin out, he's demanding changes in military leadership to properly supply and command the war forces. He can't just leave the war at this point, so he had to do something drastic otherwise most of his forces will end up as casualties. It also gives him some setup to actually leave the war if his demands aren't met.

All of this "highly controlled" talk has gotten a little hyperbolic given recent events. I think there's serious reason to think Putin has an at least somewhat loose control of everything except the oligarchs and GRU. He absolutely has the wealth and kompromat that is claimed and there's no question he's had several oligarchs assassinated, but beyond that it appears his control and oversight is relatively weak. Probably because competent people are dangerous to give too much power to. Look at Prigozhin, he's far from being capable of knocking Putin down but he's still starting to make demands.

What happens when you give barely competent and corrupt people the majority of the military leadership roles? Ukraine - the best equipped troops were sent in first but the plan barely went beyond that and went completely tits up once those forces got wiped out. They keep outrunning the supply lines of what little they do have. Morale is in free fall.

I don't think Putin is close to getting ousted, but for the same reason Russia can't be more than a barely functional country. There just aren't enough competent people in powerful positions that he trusts/can control to run a country.