Wow....
Again, as in my past posts, one cannot forget the human aspect of flying. Night flight from this SEL pilots point of view is tough at best. I can see how a bright planet like Venus be mistaken for an oncoming landing light of a plane. Granted, this plane was over an inky black ocean if I understand the position and the missing position lights **may** have given subtle clues that the first officer was looking further then he realized. Point being is that it's easy to make judgement, but we are human. Thankfully other than altitude deviations, a few bruises by passengers, it was a "non event" in the full scheme of things. I wonder if ATC even saw the deviations for as quick as it happened and corrected?
Non pilots may not realize, that at least down here in the deep south of MS, flying at 7000 feet under the cover of night, your mind can play tricks on you when there are more lights above you then below you because the haze below you conceals the lights. Breeding grounds for spatial disorientation. I actually found it easier to fly IMC when I got my IA rating because the nav lights give off a soft glow making it look lighter outside from the lights reflecting off the clouds. Plus being on gauges, reduces the chances of leans or spatial disorientation.