Why Sea Cat frightened more than it hit

Was Sea Cat more effective as psychological warfare than as an anti-aircraft weapon?

Yes; its visible approach could force dangerous evasive action even though direct anti-aircraft effectiveness was limited.

Sea Cat was highly effective psychologically and only marginally effective at directly destroying aircraft. The conspicuous missile gave pilots a threat they could see coming. In this account, evasive reactions could drive an aircraft into the ground even when the missile itself did not score a hit. The distinction separates disruption and fear from the weapon's direct lethality.