Reason why is because it's all about aggro and RNG. Fade drops your threat by insane amount, so it would always fear a different target, even a shitty mob or pet.
Fade has 0 effect as you said if you're alone with Psyfiend. That is kind of obvious as threat and aggro has no effect if there's only 1 person
I think it has a higher priority as this will make it a bit easier for a priest to push in for fears, without being worried about a random fear from ruskifiend.