At what point did we discover that Oblivion is an option,
There's some hints early on, but its not until TAE, maybe Ishterebinth that the idea gets any real credit. Even still, since the Nonmen continue living, its still a pretty dubious claim.
that the Hundred and the Solitary God alike can bestow redemption,
Never. We dont even know the Solitary God is real, and the Hundred are never mentioned as giving redemption like when Mimara forgives via TJE. The Hundred claim dead souls, not redeem them.
and that you can level up your soul?
Unclear. Ironsoul, Cnaiur, and Kellhus, maybe Serwe, have some mentions of looking like ciphrang either through TJE or in Kellhus' case the IF. But we don't know if that is just a metaphor rather than literal, if they did something specific to 'earn' that designation, or if they weren't just "always" that way.
TJE also describes Akka and all schoolmen as similarly blasted and terrifying, in a way that is reminisant of the above examples (IIRC). So it also could be there's plenty of Ciphrang, but equally likely that its all metaphorical.
I hadn't realized in my reading that there was much solid evidence that the Inverse Fire is just a tool of control,
I wouldn't call it 'solid'

I thought there might be subtle indications that it could be but that the text presents it as a factual vision of damnation.
This is the overt direction the books point us in. Just like how TJE is assumed to show objective reality.
Unfortunately we never get a look at something that is seen both through IF and TJE, so we can't really determine which is true, if either, nor see if the visions differ in some meaningful way.