The lines were up, but think of these two factors:
(1) Nagy was extremely busy with things changing by the hour and talking to all kinds of delegations, no time for detailed dissertations every six hours to Khrushchev.
(2) Khrushchev wasn't supposed to believe Nagy on trust (what's more as I wrote inthe previous diary, Nagy was made PM against his wishes), he had to make his decisions based on all information gathered from diverse sources: his resident diplomats, army, intel, other Hungarian politicians, press.

would he (or the Soviet leadership?) have allowed Hungary to develop beyond...is that the word?...the top-down centralist model?

We can only speculate. We can't say whether without intervention, Hungary would have retained and developed genuince council democracy, or would have become a multi-party socialist democracy which Khrushchev consented to, or it would have been an embryo of both killed by (more or less) peaceful restoration of dictatoral centralised power, or after some stasis, a new conservative block around Cardinal Mindszenty (see previous and upcoming last diary) would have strenghtened and would have overthrown Nagy too.

Yet that seems too much power for a radio station

At this time, there wasn't yet television in Hungary (it started next year). And radio wasn't a hundred channels like you are accustomed to, in fact at the time people could listen to only half a dozen (including newly formed revolutionary stations), so the state radio or Radio Free Europe could count on practically every home listening. Radio was the mass media. (Hence the battle for the state radio on the first day, see Outbreak diary.)

My grandparents' generation and older members of my parents' generation were very much shaped by this time, they are/were radio junkies. When I was on summer holiday at my grandparents, My grandfather would listen to the news segments of the state radio, then Radio Free Europe, and sometimes BBC Hungarian, every six hours, and of course also to non-news sections (a favourite was a short game show in which participants had to guess the title or author or performer of pieces of classical music).

hungarian national radio was still broadcasting...what were they saying?

News and appeals by public figures. Until they could: The radio was captured in the first two days (maybe the very first, I forgot). But the significance of Radio Free Europe saiying it is that they were supposed to be in the know, to talk on the basis of insider US government info rather than hearsay.

_{*Lunatic*, n.
One whose delusions are out of fashion.}