There will be heavy spoilers in my question. The plot is that a band of humans have been genetically engineered to be telepathic. Unfortunately, the engineered humans made the rest of humanity nervous, and were banished to an alien colony.
The colony does okay, despite hostile but low-tech aliens. However, things in the city begin to slowly deteriorate. Aliens suddenly appear 'out of nowhere', with the citizens discovering holes in the city walls that were clearly not new, but which the aliens are now using to infiltrate the city.
The protagonist also notes that while the telepathy trait would be expected to show up in 75% of offspring (25% having dual non-dominant genes), the actual births show almost no non-telepaths.
The story concludes by discovering that the non-telepaths notice things which the telepaths can't, because they're not being telepathically urged to ignore things (broken walls, aliens walking in their midst) which don't fit the narrative of the rest of city. In short, the normal humans see the world how it is because they're not burdened by the expectations of the whole city drowning out what their own eyes are telling them.
Any ideas what this is?