There is no spirit worship in Theravada, though there is some spirit worship in some Theravada countries... but beware the distinction.
All beings in Theravada are accounted for within the...Thirty-One Planes Of Existencehttp://www.accesstoinsight.org/ptf/dham ... /loka.html
Note, there is no Buddha realm.
As for believing in spirits, I think it's more a cultural thing than a Theravadin thing.
As for possession, I think I recall somewhere that possession is one possible explanation for madness, but take that with a grain of salt until someone learned like venerable Dhammanando is able to confirm or deny that.
"Do not force others, including children, by any means whatsoever, to adopt your views, whether by authority, threat, money, propaganda, or even education." - Ven. Thich Nhat Hanh
"The uprooting of identity is seen by the noble ones as pleasurable; but this contradicts what the whole world sees." (Snp 3.12)
"To argue with a person who has renounced the use of reason is like administering medicine to the dead" - Thomas Paine