Oh dear.
This is about your dads mental health, not the accident, and you and your mum would be better off making him see that than colluding with him.
This catatrophising is not going to help him and might make things much more difficult for him.
Firstly, the police don't seem to be prosecuting him...if they say they will leave it to the insurance companies that seems to be pretty clear, so talk of prison is ridiculous, don't collude with this nonsense.
Secondly, how, legally, is it not your dads fault?? He pulled out in front of another car. Possibly the other driver was going too fast, possibly the blind spot meant your dad didn't have a good enough view of what was coming, but he pulled out in front of him (!) of course its his fault. Your dads argument is basically, if the other driver had been going slower, he could have stopped when I pulled out in front of him'
As to all the conspiracy theory shit: The policewoman was hindering them getting witnesses by telling everyone she'd seen the accident and it was your dad's fault, well, that's true, isn't it? What did you expect her to say? What witnesses exactly do you think this hindered you from getting? People who were going to say, 'no the route was completely clear and your dad was perfectly safe to pull out' (!) And you say her view was 'probably' obscured yet say in your op she was right behind the other car.
She gave her details, identifying herself and left it when on duty police arrived. It seems to me she did exactly right, she probably didn't want to be doing this in her off time but had no choice but to step in until the on duty officer got there, its just what she was saying isn't what your dad wants to hear.
If your dad starts on with this conspiracy shit with the insurance company and the police then he'll end up getting prosecuted. Instead, he wants to answer factually about what happened and leave it at that.