As a third person narrator he's unreliable for several reasons. First of all, he doesn't ponder what Zeena or Mattie think or feel, but only how they might have appeared to Ethan in the past, and Ethan is definitely biased in favor of Mattie. Also, the narrator has already told us (in the Prologue) that his "vision" of Ethan's story is a combination his imagination and of each townsperson's "different" story, which may or may not be accurate. Since none of these townspeople could have seen most of the events, they can't be considered reliable sources of information.