There seems to be a distinct difference here, as the New Gods are platonic idea-beings and the Angels didn't seem to be as wide-spread or 'important' to the every day existence of the universe. The application of the whole cave allegory, with different incarnations based on different appearances, was specific to the New Gods, and a nice little continuity patch AND an innovation that allows writers to do what they like with the New Gods while keeping them sufficiently grand. It allows me, as a fan, an in-story excuse to do what I've always done; pick and choose the continuity that appeals to me and disregard any story that I don't like as a particularly weak 'shadow' or 'projection'.
I'm not sure how the Phantom Stranger coming across an omniversal nexus in any way impacts the nature of the Fourth World dimension/universe/whatever.It sits above parallel universes at least (since I cant remember if it's even been explained, I take parallel universes as the ones with an Earth in it, while non-parallel ones are the ones like the Fourth World, Azarath and Trigon universe of birth). The Phantom Stranger at least has come across what he called an Omniversal Nexus, so supposedly the Fourth World isn't the 'highest' form of dimension.
The only piece we've had that specifically gives us any indication was in Pollack's New Gods run, which indicates that all the mortal universes exist as small 'air pockets' in the grand New Gods universe. Which would make the entire DC Multiverse a small thing indeed.
Myself, I think it has much more to do with the nature of the reality than it does the 'size' of it. I take the New Gods universe to be something beyond our imagination, too pure and too bright to really be understood, where everything has alive with significance. It's not just that the physical multiverse is 'smaller', it's that the very fabric of its reality is duller, weaker; it is the shadow, the New Gods the FORM and the FIRE.