Well, when reacting to Infinity War fanfiction, first, keep an open mind. Fanfiction can take the story in so many different directions. Some might focus on characters that didn't get much screen time in the movie, like Nebula's internal thoughts during the chaos. It's important to remember that it's a creative interpretation by fans. So, don't be too quick to judge if it doesn't match your exact vision of the movie.
Some of them might feel amused. For example, Peter Parker would be giggling at the funny parts. He'd find it really cool that someone took the time to write about their adventures in a different way. Dr. Strange would be a bit more detached, observing the fanfic with a critical eye, thinking about how it could have been written better in terms of the magic and time - related elements.
In Infinity War fanfiction, Loki can be alive. Fanfic authors have the creative liberty to rewrite the events. They might bring Loki back to life using magic or some other means. For example, Loki could have faked his death and gone into hiding, only to reappear later in the story to help the heroes fight against Thanos. His survival can add an interesting twist to the story and create new interactions between characters.
Well, it would be much more light - hearted in many ways. The Cartoon Network characters have a different style of humor and action compared to the serious and often dark tone of the original Infinity War. For instance, the Powerpuff Girls would bring a sense of girl - power and sassy dialogue, which is quite different from the brooding heroes in Marvel's Infinity War.
One way to 'fix' the situation in a fanfiction could be to have Loki's faked death in Thor: The Dark World be more thoroughly investigated by Thor. If Thor had been more suspicious and dug deeper, he might have uncovered Loki's real plan earlier. This could have led to them working together more effectively against Thanos in Infinity War, preventing some of the tragedies that occurred.
In most cases, it is legal. Fanfiction is a form of creative expression by fans. As long as it doesn't violate any copyright laws in a major way, like using the exact same footage from the trailer without permission in a way that undermines the original work's marketability. But if it's on a legitimate platform that respects intellectual property, you should be okay.