“Does this mean that a human with niyatha miccha ditti may be born again as a human after his death, if he has not expended his kamma for a human bhava.”
Yes. If it is not an anantariya kamma he will be born human to the end of the human bhava.
“However, if it means that a person with niyatha miccha ditti is born in the lower realms after his kamma for the human bhava is expended, then these stories do make complete sense.”
That is indeed the case.