The younger characters in Encanto like Antonio would be excited. He loves stories and new ideas, so Mirabel fanfiction would be like a new adventure for him. He might want to share it with his animal friends. And Dolores, with her ability to hear everything, might already know about the fanfiction. She could be either intrigued or a bit worried depending on how the fanfiction is being received by the rest of the village. If it's causing a stir, she might be concerned about the family's reputation, but if it's positive, she would likely be quietly supportive.
If the fanfiction incorporated the family's magic in new and creative ways, some characters might be delighted. For example, if it showed Mirabel having a new form of magic related to her ability to bring the family together, the family members might see it as a positive expansion of their story. However, some might be skeptical. Abuela Alma might question if it goes against the family's established magic traditions.
They might be really surprised. Some characters could be flattered by the positive portrayals in the fanfiction. For example, Mirabel might be happy to see different interpretations of her story and how she's seen as a hero in some fics.
Encanto is an original story. Disney's team of writers and animators came up with the concept and brought it to life on the big screen. It's not a adaptation or retelling of another story.
Indeed, Encanto is based on a story. The creators combined different imaginative concepts to bring this story to life, featuring themes of love, unity, and self-discovery within a magical setting.