They would probably be horrified. The Dursleys have always despised magic and those associated with it. Teddy, being a young wizard, would represent everything they dislike. They might try to shoo him away or call the police, thinking he's some sort of freak.
The Dursleys could also be in complete denial. They might convince themselves that Teddy is just a normal kid playing tricks and that there's no such thing as magic. But as Teddy continues to do magical things, like making objects float or changing his appearance slightly, their denial would start to crack.
The Dursleys would most likely be horrified. They have a deep - seated hatred and fear of magic, and Ron and Hermione are clear representatives of the magical world. Vernon might turn red in the face and start shouting, while Petunia would clutch her pearls and Dudley would cower behind them.
They might be terrified. The Dursleys are used to a normal, non - magical world, and Harry's family is full of magic. They could see something as simple as a wizard apparating and completely freak out.
James might be really excited. He's heard stories about his father's friends, and Teddy is like a link to that past. He'd probably be full of questions about the Marauders and what his dad was like as a student. Lily, on the other hand, would be more reserved but still interested. She might be a bit more empathetic towards Teddy, considering his difficult past. Overall, they'd both be curious and eager to learn more from him.
He might react with defiance. Teddy is not one to back down easily. If Umbridge tried to impose her unjust rules on him or his friends, he would likely oppose her openly. He could use his ability to change his appearance to make a statement, like turning into a wolf (in honor of his father) to show his strength and resistance.
They would likely be disgusted. The Dursleys are so anti - magic that any form of fan - created stories about the magical world would be abhorrent to them.
The Dursleys' reaction would be complex. Vernon would be enraged and might even try to burn any fanfiction he found. Petunia would be conflicted. Part of her would be disgusted, but a small part might be a bit curious as she has some connection to the wizarding world through Lily. Dudley might be more interested than his parents, especially if the fanfiction had some action or adventure that appealed to his more adventurous side.
Naruto would probably be very curious. He's always open to new things and new people. He'd likely ask her a ton of questions about where she's from and what she can do.
The wizarding world would likely be in shock. Harry was seen as a hero, and this act would completely change their perception of him. Some might think he was finally getting revenge for all the abuse he endured, but many would condemn his actions as murder is still a serious crime in the wizarding world.
Percy would likely be very critical of their lifestyle. He comes from a world where family is important and they support each other in the face of danger. The Dursleys, on the other hand, seem to shun anything out of the ordinary and are unkind to Harry. Percy might try to show them a different way of living, with more love and acceptance, though they probably wouldn't listen.
They would be devastated. Harry has many friends and allies. People like Hermione and Ron would be heartbroken and would probably seek revenge. The Hogwarts faculty would also be deeply affected. Dumbledore, if he's still alive in the fanfiction, would feel a great sense of guilt for not protecting Harry better. There might be a split in the wizarding community, some believing the Dursleys were acting on their own, others suspecting a darker conspiracy.