One idea could be creating an OC who has a unique magic related to the elements but in a very different way from the existing characters. For example, an OC that can manipulate the emotions associated with elements rather than the elements themselves. This could lead to some really interesting interactions during the GMG as they might be able to influence the performance of other competitors by affecting their emotional state related to their magic.
Develop a really unique backstory for your OC. For example, if your OC has a tragic past that led them to develop their particular magic in a different way. Maybe they lost their family in a dark magic experiment gone wrong and as a result, they have a magic that is both a curse and a gift. This kind of deep backstory will make your OC more interesting and your fanfiction stand out.
One way they could cross over is through a shared magical element. In Naruto, there are various jutsu which could be seen as a form of magic like in Fairy Tail. And the Grand Magic Games (GMG) in Fairy Tail has a tournament - like structure. So, perhaps a tournament could be set up where characters from Naruto and Fairy Tail participate. The Naruto characters could use their unique abilities like Sharingan or Rasengan, while Fairy Tail mages use their magic spells. This would create an interesting dynamic where different power systems interact.
One idea could be a new team emerging during the GMG with unique magical abilities that no one has seen before. They could bring a whole new dynamic to the competition.
A plot could involve a powerful dark force threatening both the Naruto and Fairy Tail universes. This force could be something that neither ninjutsu nor magic can easily defeat. So, the characters from both worlds must come together. The GMG could be a platform where the first interactions occur. Maybe some Naruto characters enter the GMG under false pretenses to investigate this new threat that seems to be related to the event.
Lyon Vastia could be a great character to focus on. He has powerful ice - make magic, but often gets overshadowed by Gray. In a GMG fanfiction, he could have his own moment to shine, perhaps by teaming up with Fairy Tail for a special event in the games.
In the Fairy Tail universe, an OC named Kai was a skilled swordsman. He had been on many adventures with the guild members. But during a battle against a horde of demons, Kai was fatally wounded. His friends brought his body back to the guild. For his funeral, the guild hall was decorated with his favorite things - swords and old maps. Lucy wrote a poem in his memory and read it aloud. Happy flew around sadly, chirping softly. The members dug a grave near the guild's special tree. As they laid Kai to rest, they all made a vow to continue fighting for justice, just as Kai would have wanted.
Samuel Oc is an original character created for Fairy Tail fanfictions. He's a character that doesn't exist in the original Fairy Tail series but is made up by fans to add new storylines and perspectives to the Fairy Tail universe.
The OC's reincarnation can have a huge impact. If they are reincarnated as a new member, they can bring fresh perspectives to the relationships. For example, they might befriend characters who were previously on the outskirts of the guild. If reincarnated as an existing character's relative, it can strengthen or complicate family - like relationships. They could also introduce new rivalries if they have different beliefs or goals compared to other members.
There could be a deeper interaction where the OC's Sharingan actually evolves due to exposure to Fairy Tail magic. Maybe the strong magical energy in the Fairy Tail world causes the Sharingan to gain new abilities, like being able to see the future more clearly in magical battles or being able to sense the presence of hidden magical items. This would create an exciting development in the fanfiction as the OC discovers and masters these new powers.