I've said it many times before and I'll stay it again, that kind of twist just isn't the kind of thing you introduce into a jrpg series already 3 games in at that point. (SO1, SO2, and blue sphere). As someone that loved SO2's plot for the most part I also cannot stand SO3's twist. Like you can introduce this twist into any jrpg series where the games are either directly or distantly linked plotwise in someway (and is already multiple games in of course) and it will almost always come up freaking stupid (obvious exception to games that already deal with it being a video game and played by gamers like with .hack). Lufia 1 and 2, make a lufia 3 where its all a mmo played by 4D beings. Do it again for theoretical mother 4, retcon shadow hearts 3 for this after koudelka and shadow hearts 1 n' 2 (although some might see this as an improvement, lol), valkyria chronicles 5, etc.
Imagine if you were someone who really loved mother 3 and the wild ride lucas went through, a mother 4 comes out, and it goes with that kind of twist in yep...its totally canon, happens directly after mother 3.......yeah, thats how some of we SO2 fans feel.
I feel like it would have been better received if something like that was done right from the very beginning instead of randomly going to that from all the lore building from the first three games. Even then, because of the time when SO3 was made, to me it still comes off as just a rip-off of the matrix with a few things flipped around thus it ain't even as "deep" that some jrpg fans think it is.
I don't want to be that guy, but the whole point of SO3 is that it doesn't matter if they're actually characters in a video game because you still care about them. Believe it or not, Star Ocean 2 was a video game all along before 3 came along! You played through it, even! If it was revealed tomorrow that we were unambiguously, 100% part of a simulation, absolutely nothing should change, because what happens in this world still matters. Star Ocean 3 is explicitly about this, and being mad at it for that shows an enormous lack of understanding of the game.