Strictly speaking, I feel that the existence of magical high school LNs in the setting presented in a magical high school LN to be quite likely. People are still going to write novels even if there's magic being flung around.
The MHSLN's would likely be dividable into two main categories:
1) those that we, in the real world, would classify as MHSLN's but would be considered, say, a slice-of-life story by those living in the LN's setting, due to the existence of the magical high school just being another aspect of reality for them;
2) those that are considered to be MHSLN's both in-setting and out-of-setting, likely because its depiction of its magical system and/or magical high school differ from the way either or both of the ones present in the LN's setting (like, say, if the Harry Potter books were a thing people read in the Mahouka setting).
If the magical world and its magical high school are a secret from the rest of their world, this gives rise to two more categories which are probably published by/for the non-magical portion of the setting:
A) those that reflect the reality of the setting's magical portion, be it by intent or by pure chance;
B) those that portray a magical setting that is different from the native magical portion.
