"Belief in belief" exists as a phenomenon but is neither necessary nor sufficient to explain the claims of the Dragonist (if I may name his espoused metaphysics thus) in Sagan's parable.

My most recent encounter with someone who believed in belief was someone who did not in addition believe. He had believed once, but he lost his faith (in this case, in God, not dragons) and he wished he could have it back. He believed in belief--that it was a good thing--but alas, he did not believe.

In the above article, Eliezer (if I may so call him) was invoking the concept of belief in belief to explain something--that is, it was a hypothesis of a sort. The phenomenon in question was this Dragonist who claimed to believe but gave some evidence that he did not in that he rejected the most obvious consequences of a dragon being in the garage. Our hypothesis was that he didn't really believe but thought he should and was, in effect, trying to convince himself and others that it was so but (in the case of himself) not so overtly that he'd have to admit to himself he wasn't how he hoped he'd be. If our hypothesis were true, what would we anticipate? If we confronted this guy, that he'd break down and admit he lack of belief? Someone whose belief system runs to invisible dragons is too crazy to let that happen so easily. Maybe what we anticipate is that given sufficient anti-psychotic meds and associated treatments and time, he would recant? What if he didn't? Would we so believe in our hypothesis that we would have faith that given infinite time (say, the amount of time necessary to search all the integers until we identified the last twin prime or the first perfect number that didn't end in 6 or 8) he would recant in principle. Worse still, maybe he would recant to get us off his back but continue to believe in secret.

In short, since our Dragonist's subjective mental state is invisible to us, even were we to sprinkle flour over his head, we are ultimately forced to rely on faith that belief in belief is what is behind this phenomenon.