I agree, if you look at where he is it looks like the inside of a hollow tree.
But with that page you just showed... those buildings at the top are about the right shape even if the walls would have a weird texture inside. If he isn't in there anyway he'll definitely be near the Hokage faces as it makes sense for the author to pick somewhere the readers know as well as the characters by now.
And yeah anyone other than proper characters are going to get beaten around by Konan before Nagato himself even has to lift a finger.
I think Naruto will answer Pain by thinking back about Haku.
Pain's suffered really in a similar fashion, the difference is that Pain doesn't want acknowledgement he wants peace.