Woo! Glad you had fun playing it ^-^ Thanks so much for checking it out and taking the time to come here and comment :3 The voice actors are pretty darn awesome :P I really don't know how voice actors manage to bring characters to life so well, but it amazes me every time, haha. It's like magic! And the soundtrack was so much fun to make <3 I've actually managed to upload all the original tracks to YouTube now if you ever wanted to listen to them :3 I can't put every single track there though, only the ones I made myself. The others are asset tracks that I'm only allowed to use within a game, so I can't upload those ones x3 And that scene was especially fun to make, hehe.
I guess I should probably put the rest of my reply under spoilers too x3
Spoilers!
Depending on which endings you got, you may or may not have seen the reveal which is kinda like the 'true'/cannon version of what's going on (it's just something you get to see on the title screen after the 'true' ending, but it disappears if you hit new game, load, or quit, so it's possible to miss it >.<)
Buuuut, even with that there, I don't want it to be like the law or anything, haha. It's more fun to leave things open to theories and stuff! That's why I chose to put that reveal where I did rather than write it into the actual story :3 + since the game isn't technically fully finished yet, I want to be able to leave things open as well to explore different possibilities.
Both of your theories have parts of them that both kind of work together actually with the different thoughts I was having while writing the story :D And I'm not gonna say any of either of them are correct or incorrect because it's more interesting if everyone draws their own personal conclusions and interpretations :3 so there can't really be any right and wrong.
I'd say your first theory leans much more heavily into my line of thought while writing though :3 And the funny thing is, I thought of having it be that everything was actually happening in real life in some form, but sugarcoated by the hallucinations, and also thought of it just being pure hallucinations with nothing happening in real life. I think the first option is a lot more fun to imagine x3 but I didn't want to say for sure one way or the other because it's fun to leave it ambiguous, haha.
And then with your second theory, I didn't intend for them to literally be MC's bunnies come to life (Dandelion is so awesome btw x3), but I did want their pet bunnies to be a big influence in why Blythe appears the way they do. In fact, LPB and I discussed ways that we could somehow show a connection between Blythe's appearance and the actual pet bunnies, stuff like one of the bunnies wears an orange bow, the other has a blue collar kind of thing, and so this is then represented on the two Blythes. I couldn't come up with a good idea for how to show that though or the best place to put it, and LPB said she was a bit stuck on that too, so we left it in the end.
Still not gonna say that's not what happened though because it totally could be what happened :P