In this fanfiction scenario, their reactions could vary greatly. Natasha Romanoff would likely be sizing up the situation immediately, trying to figure out how this new knowledge can be used to their advantage. Clint Barton might be a bit more hesitant as he's had his own experiences with Loki's mind - games. And Bruce Banner would be worried about the potential danger Loki's true form poses, especially if it has some kind of power that could set off the Hulk.
Loki's true form might be something that is more in line with the dark and mysterious nature of his character. He could have a more elongated body, with eyes that glow with an otherworldly purple hue. His clothing or lack thereof could be made of some strange, ethereal material that seems to move on its own, and his overall appearance could give off an aura of both danger and allure, making the Avengers both fearful and intrigued at the same time.
When the Avengers meet Lady Loki in fanfiction, their reactions would vary. Iron Man would probably start analyzing her, trying to figure out her weaknesses. Captain America, being the moral compass, would try to give her a chance to prove herself, but also be ready to fight if she betrays them. And Thor, he would have a mix of emotions, part anger from past experiences with Loki and part curiosity about this new form of his 'brother'. The more impulsive members like Hulk might just see her as a threat and react accordingly.
Well, Thor might be a bit shocked at first. He'd probably be amused by some of the wilder interpretations of his brother in the fanfiction. Captain America, on the other hand, would likely be confused by the whole concept as it's so different from the traditional stories he's used to. Iron Man would probably make sarcastic comments about how creative the fans are in coming up with these stories.
If Loki impersonated Thor, the real Thor would be furious when he found out. The other Avengers, like Iron Man, might initially be confused but then quickly realize something is off. Iron Man would likely use his technology to detect the impostor. Hulk might just smash first and ask questions later when he senses something wrong with 'Thor'.
Some of the Avengers, like Thor, might have a more complex reaction. Since he is Loki's brother, he may feel a sense of responsibility towards the children. Others like Captain America would be cautious but fair, trying to assess if they are a threat. Iron Man, on the other hand, would probably be sarcastic and make some snarky remarks while sizing them up.
They show him kindness and try to understand his motives. They offer support and help him find a better path.
Thor might be conflicted. He'd see his nephew/niece but also remember Loki's treachery. Iron Man would probably be sarcastic at first, making remarks about the family genes. Captain America would be more cautious and diplomatic, wanting to give her a chance but also being on guard. Black Widow would try to read her body language and motives right away.
Tony Stark might use his quick wit and technology. He could immediately scan Peter to make sure there's no physical danger causing the hyperventilation. Then he'd probably crack a joke to try and calm Peter down, like 'Kid, you breathe any faster and you'll fly away like a human jetpack.'
Some characters would likely be entertained. For instance, Loki might enjoy seeing the various ways fans write him as a more complex anti - hero. He'd probably find the creativity in the fanfiction quite appealing.
They react differently. Stark might immediately start thinking about how to improve the tech in the movies. Cap is likely to be more focused on the story and the characters' motives.