If my expression of skepticism counts as "flaming," you've had a very sheltered life on the internet. Acknowledging that ergotism is not my field of expertise is a way of inviting those who can correct my gaps of knowledge to do so.
I'm not sure what culture's "ruling class" you're referring to as being "into hallucinogens." If you mean the Incas, sure, though that would have been the coca leaf, which I don't believe is properly hallucinogenic (again, not my area of expertise). One wonders about ancient Indian brahmins and Soma but unfortunately no one actually knows what soma was. The medieval aristocracy drank, to be sure, as did the Romans, but we often forget that they watered their wine and were not taking in any more actual alcohol on a daily basis than anyone does today. If the use of narcotic or hallucinogenic substances was accepted, you'd expect them to have written about it more, and if it wasn't, you'd expect more moralists (every civilization had them) to have written condemning their consumption. I CAN say within my expertise as an historian that these substances are not very evident in the sources, so there's no evidence for deliberate widespread consumption until the modern era.
So I've done a little internet checking on ergot, nothing I'd call real research, and here's what I've found. Ergot grows on rye (only), and is fairly common but doesn't seem to have been utterly pervasive. Rye was widely cultivated in the Middle Ages but not the exclusive food supply, it stood alongside of wheat, oats and barley for making bread or porridge. There were periodic regional outbreaks of ergotism in the Middle Ages. Its main effect is not hallucinations, as it turns out (though hallucinogenic drugs can be made from ergot), but either convulsions or gangrene, depending on the variety of ergot. Convulsive ergotism is sometimes accompanied by hallucination. Ergot poisoning was recognized as a disease by medieval people, they called it "Holy Fire" or "St. Anthony's Fire" (though they didn't know the cause).
It is plausible that cases of ergotism could have been interpreted as a sign of witchcraft or demon possession, if they weren't recognized as St. Anthony's Fire, but you can't make the reverse conclusion - that all accusations of witchcraft, let alone the belief in witchcraft itself, were the result of ergotism.
The cause of St. Anthony's Fire wasn't discovered until 1670, so nobody was deliberately cultivating ergot to manufacture narcotics from it. Ergotism seems to occur in periodic acute outbreaks, not as an endemic "dream state." The problem with appealing to ergot as an explanatory device for historical events is precisely the evidence issue; a description of an individual's behavior (convulsions, etc.) may match symptoms of ergotism, but there are other things (e.g. epilepsy) that would have been described by pre-modern authors in similar terms; there is no way to verify that ergot was the cause, even if it's a plausible speculation. There is certainly no way to measure how widespread ergotism was other than recorded outbreaks of St. Anthony's Fire.
A lot of sloppy interpreting gets done by appealing to these kinds of speculations. The Salem Witch Trials would be a case in point. The girls who initiated the trials were behaving strangely, to their parents' eyes; but convulsions and hallucinations were not among the symptoms. They were doing things like Jumping into long religious discourses, running around the room flapping their arms, crawling around under the table. Most of it sounds like adolescent girls reacting against their highly regimented existence with outbursts of chaotic silliness. The wave of accusations the girls triggered was not the product of "hysteria" and certainly not hallucinations, but of paranoia rooted in deep-running social and economic conflicts in the town.