Are they aware of the power of Persona?
No and yes. Sora is basically Tattletale, he can draw absurd connections using scraps of info but he cannot pull something from nothing. He is aware that you have powers that break vr games. He intuits that it's a form of applied incarnation and cognitive psience. He does not know about the supernatural.
Again Blank are geniuses but their overall intelligence is limited by MY intelligence. As the writer I mostly get around this by giving them more knowledge and making Hiyori less able to predict them.
It doesnt have to be a VR game, right?
The game option is a VR game, namely the tournament set on June 15th.
The theme of the fight is going to be about rules, even in the open fight. Explicitly blank's VR RD power is about rules but only one both parties agree to.
Pretty sure if we break the Judgement Link there's no replacement, so we'd be missing out on the Judgement Personas permanently.
I have no replacement handy. Itami doesn't fit well IMO with Judgment. I'll probably start looking for alternatives if broken, but no promises.
My question is that IC, why would Hiyori entertain BLANK's game? She has just finished pillorying Kayaba on his desire to feel special and powerful trapping people in his HEAVEN (which was hell to others) and now she sees BLANK attempting to do the same thing, despite knowing everything because they want the world where they are winners.
Character wise it just feels kina off.
Ultimately this is a quest so there have to be options. I did include the kidnap option explicitly to just end the fight instantly.
Narratively I've been setting up the Blank fight this whole arc, but that doesn't mean it's set in stone. Kidnapping Shiro is, at least via the logic of the scene, something Hiyori can do right now that Blank truly has no counter too.
It's the same for XaXa. The theme of this arc is Chaos. During the ALO arc truth be told no matter what was chosen in the end it would've ended with a fight vs OBERON. Even if you had pubically released Asuna's accusation Sugou would've locked himself into FullDive. GGO is very different. The final fight is gonna be vs a souped up version of whoever is left, and even I don't have it set in stone. Obviously some candidates are much more deeply hidden than others, but I do have it planned that no one individual final candidate is untouchable.
I hoped for a XaXa fight in VR. I gave plenty of options to back out. XaXa's move, if he ever felt threatened in RL, was always going to be locked in FullDive to stay in the game, counting that the police would be obligated to keep him alive. That let's me preserve XaXa as a VR threat. But the votes were consistent and you opted for maximum visibility and effectiveness. Swat cut the power and him arrested before he could even react, and now XaXa can only twiddle his thumbs.
Overall it's just the woes of a quest where choices have to be offered.