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Chogtyam Trungpa seems to have turned "Ignorance" into a homunculus. It is important to understand when reviewing this material that the Buddha did not teach in terms of dualism or non-dualism.

The Buddha did teach a psychology, and a very good one, in the form of paticcasamuppada. He taught that we tend to grasp at sense experience and fashion self-view to accord with that sense experience, and act according to that self view. He further taught that self-view is a house of cards, that we cling to experience and self-view and expect the world to conform to that view, and experience misery when the world does not conform. This is the effect of ignorance (not knowing, not seeing) on our perception of the world. Ignorance of what? That sense experience is impermanent, not "me" or "mine", and can bring suffering when we grasp it as "me" or "mine".

With the removal of this ignorance -- first through understanding, and, more gradually, through integrating this new understanding into our mental habits -- we learn to not crave for and cling to sense experience, and we do not experience misery over sense experience. We learn to not invest emotions, assumptions, and expectations in what we experience, and thus we become mentally stable. Misery and suffering die out for lack of feeding. This is the Buddha's psychology; it details the Second and Third Noble Truths of the cause and cessation of misery and suffering.