Actually Hikaru would be (as of today) 6/8 among the Candidates in classical ELO, as the world #11 in live ratings. If anything, Hikaru is probably underrated; he gained around 20 ELO points in the two Grand Prix legs. Like the OP, I'll disclaim being a Hikaru apologist; but he is world #1 in blitz and world #2 (briefly #1 this year) in rapid rating, which is why, for example, http://universalrating.com/ratings.php has him as world #2 in general playing strength. If a game gets into time trouble in the Candidates, he's the favorite against any of the competition. It seems his strategy is just to survive the openings and then try to outplay or flag people later on, which is a surprisingly viable strategy.
Who is he higher than? He's tied for last as of current ratings on the fide website, or does that not yet include results from grand prix round 3? (Which would put him ahead of Teimor and Duda, presumably)
> seems his strategy is just to survive the openings and then try to outplay or flag people later on, which is a surprisingly viable strategy.
This doesn't work when people are both stronger middlegame players than you and know your strategy. And of course Ian and Alireza are liable to put hikaru in time pressure even if they don't straight outplay him.
As sibling comment says, he's higher than Duda + Radjabov in live ratings now.
It's just not obvious to me that any of your statements about the other players being so much stronger than Hikaru are true. It's really hard to objectively estimate his classical playing strength because he just didn't play for two years and the rating has been volatile since he started playing again, but (for example) he played 4 classical games with Levon Aronian between the two legs with a +1 -1 =2 score, and +2 -0 =0 in rapid tiebreaks. Aronian is a roughly 2780 player, world #5, likely to be the strongest player who missed candidates. Hikaru also scored 50% in classical Grand Prix matches with Wesley So and Shakhriyar Mamedyarov, two other strong top-10 players.
My argument would be something like: Aronian was the strongest player Hikaru played (and was the highest rated player in both Grand Prix events Hikaru participated in). Depending on how you determine things, either 3 or 5 of the participants are rated higher than Aronian is/was in classical, and Naka won't be able to rely on winning the rapid against any of Ian, Duda, Alireza, Ding, Rapport or even Caruana, because they're not 150 points worse than him in Rapid (well except Alireza but that's probably inaccurate).
If the best Hikaru can do is draw against So and Aronian, that's not going to cut it in the candidates. Maybe he can o better than that, but there's nothing we've seen that suggests that.
"Naka won't be able to rely on winning the rapid against any of Ian, Duda, Alireza, Ding, Rapport or even Caruana,"
Remember way back in 2021 when Hikaru won the St. Louis Rapid and Blitz? Going undefeated in the entire event ahead of Caruana, Rapport, So, Mamedyarov...
Furthermore, Hikaru has always outplayed Nepo. His lifetime record against him including rapid/blitz is 19 to 12, with 29 draws.
Hikaru also drastically out performs Duda: 26 to 9, with 17 draws.
So, obviously Hikaru is rated lower than most of the players in the candidates, even with the recent surge. It's equally obvious that he's a much stronger player than he was going into his semi-retirement a few years ago. The question is, given his recent 2800+ tournament performance ratings and dominance in all time controls that he's played over the last year, is his actual playing strength back at the 2800+, world #2 level it used to be? It's entirely plausible based on what we see, and lots of chess people think that he, indeed, as strong of a player as he looks. That would make him competitive in the candidates (though, that is a total crapshoot, and no one is a "favorite" to win.)