To interpret The Potted Psalm is beyond my capacity. I'll just try to react to it.
In Visionary Film, P. Adams Sitney uses the title of this specific film as the title of a whole chapter. And there is a quote by Sidney Peterson over there:
"The connections may or may not be rational. In an intentionally realistic work the question of rationality is not a consideration. What is being stated has its roots in myth and strives through the chaos of the commonplace data toward the kind of inconstant allegory which is the only substitute for myth in a world too lacking in such symbolic formulations. And the statement itself is at least as important as what is being stated."
Vertical pans, rhythmic movements, fetishes, but more importantly, freedom, the liberty to see what happens... A film that grows organically, without any rational connections, always human... Using a phrase from Peterson's Mr. Frenhofer and the Minotaur: "Something that is perfectly natural, but beyond anatomy".
I don't have the book at hand but in Film at wit's end: eight avant-garde filmmakers, Stan Brakhage has detailed comments about the film, and Peterson's art in general.
As Fred Camper writes: "The truly silent cinema of avant-gardists requires no accompaniment—silence deepens the viewer's imaginative involvement."
And one of my favorite quotes on art, by Sidney Peterson:
"These images are meant to play not on our rational senses, but on the infinite universe of ambiguity within us."
In my opinion, the title itself describes Peterson's definition of film as art: Great films are sacred songs that have, unlike ancient songs, a definite form, but they are also like plants, capable of growing in time. According to Merriam-Webster: "Potted" also means "drunk" in slang. I don't if the word was used in this sense at the time, but if it was, then "Potted Psalm" might also mean a sacred but possibly irrational, debauched song. I think all of these interpretations, and others I can't think of, can be true at the same time.