Hi Gary!
This is a really exciting idea
Your gut is right. It's 21 words.
And any text entered by the player doesn't count against the word count, that's correct!
I have a variation on this question. I like to give my players a choice of pronouns. They/she/he at a minimum. Would this mean that every time throughout the story I used a pronoun for the player character I'd have to count it as three words? If so, would that apply to conjugation too (she is, they are; he sits, they sit)?
Hey, sorry I got back to you a bit late! I didn't get a notification as I think you replied to someone else's message (or maybe it got buried in all of the notifications of people joining the jam, either way I apologise!). Thankfully the jam hasn't started yet :)
Yeah, I'm afraid that your question would be the correct way to interpret the rule.
I believe choices of pronouns are cool, so hopefully the below advice is useful. There are ways you'd be able to minimise how much it'd affect you game. Not extensive and just a collection of thoughts, so apply as you see fit:
Hope that helps!