Well, some might be really amazed. They could see a new side of Deku that they never knew before. His singing might show a different level of confidence or a hidden talent, so they would probably cheer him on.
One interesting plotline could be Deku having to face off against his classmates in a series of challenges that test not only their quirks but also their teamwork and strategic thinking. Maybe there's a misunderstanding that leads to the conflict.
Deku himself is likely to shine. Given his powerful quirk and his growth throughout the main series, he'll surely put up a great fight against his classmates. Bakugo could also shine as he's always been in competition with Deku and has a very strong quirk.
Bakugo would likely be furious. He'd feel betrayed and would probably be the first to attack Deku, yelling at him about how he's thrown away everything they've worked for. Uraraka might be more empathetic. She'd try to understand what drove Deku to become a villain and hope there's a way to bring him back to the side of good.
Another theme is the exploration of their differences. Shigaraki represents chaos and destruction while Deku represents hope and heroism. Fanfics usually explore how these two opposing forces interact and influence each other. For example, in some fanfics, they start to understand each other's perspectives better as they spend more time together.
To write their relationship realistically, you need to consider their personalities. Deku is kind - hearted and determined, while Shigaraki is more cynical and vengeful. So their interactions would be full of tension. For example, if they have an argument, Deku might try to reason with Shigaraki using his ideals, but Shigaraki would likely mock or reject them.
One interesting plot could be that Deku and Shigaraki, as brothers, are on opposite sides at first. But then they discover a common enemy that forces them to work together. This would involve a lot of character development as they have to overcome their differences. For example, Deku's belief in heroism and Shigaraki's hatred for the hero society.
One great 'Shigaraki x Deku' fanfic is 'Unlikely Bonds' which explores a unique friendship-turned-something -more between them. It delves deep into their complex characters and how they might interact in different scenarios outside of the main plotline.
Deku might be completely shocked at first. Since Bakugou has always been so aggressive towards him, he would never expect such a confession. He might just stand there, mouth agape, not knowing what to say.