Reforming villains into friends is a longtime tradition in DBZ, but never with a villain you've stuck in a cage and don't interact with. Those always turn out poorly.
Except we do interact with him.
Look, I am ok with either of the options winning but I am having to constantly post to clear stuff I feel is wrong, mostly in favor of the self seal. I've seen people saying we wouldn't interact with him if one option is chosen over the other (we are likely to vote for it regardless of which one wins), that we would cause sensory deprivation (really? torture?), that we only choose one for powers (disregarding all other reasons given), that we don't actually get any power from choosing it (ignoring that power can also mean other things like control over the inprisonment or first access to information), that it will cause Kakara to grow power hungry (we can't know but seems ooc), that Dazz would be killed if chibified (he would be under protection), that he would become a pet for the misfits (can't because of masquerade), that we could use his psychic powers (we don't know), that we could get a transformation which brings mental issues (we don't know), that we could be blackmailed into releasing him (any reason to do so has simpler ways to be obtained)... among with several others.
Look, I will try to make it simpler:
Chibi probably has a better chance to rehabilitate him since it lets him interact with people independently of Kakara (Poptart confirmed that we can set the seal so that he can talk to others if self seal but that is still dependant of Kakara). It has the problem that we would need another spirit saiyan if we wich to change the seal.
Self seal is a harsher punishment and will probably make it harder to rehabilitate him. However, we can alter how the seal works and eventually release him if rehabilitated.
So:
Chibi: Better for Dazzarel in the short term since he would be more comfortable and have more agency but he is likely stuck as a house dragon. Easier to rehabilitate and less complications for Kakara.
Self: Longer and harder path to rehabilitation but better reward for us if we manage it. Dazzarel is full power upon completion.
Both allow interactions with others but chibi is better if you want that since Self depends on Kakara adjusting the seal for it.
Chibi means that, saving exceptional circumstances, Dazz is stuck as house dragon without powers for a long while. It might hurt his pride.
Self pretty much lock us into trying to rehabilitate him since if we don't it takes Kakara to places we are probably not comfortable with.