Oh, she's definitely an Other.
The Psychic is part of the Hanso Foundation as well. They needed Eko as a strong moralizing force on the island, so they concocted a deep lie in order to cement Eko's faith. And notice how Libby shows up just in time to make sure the young lady doesn't accidentally mess up her story?
What other main characters didn't get a flashback episode? Rose, but that was clearly because of scheduling problems, and she finally got one this season. No, they wouldn't just kill off Libby without at least some hint to her backstory, unless her backstory would give away too much.
Sure, there's the whole "Got hired for another show" claim, but, um, why would she have been looking for another show if they weren't planning to off her in the first place? I can see killing off Ana-Lucia prematurely, sure, but Libby I don't buy. She was another plant. She probably was a psychiatrist, got recruited, went insane when she saw Great Cthulhu under the island, then was rehabilitated and brought back in on the project.
Well, anyway, next week looks like a Michael flashback episode (have we had one yet this season?). That leaves us with one more episode thereafter before the end of the season, right?