The part about the moon rabbits is another multi-layered reference. Read the Wikipedia article on "moon rabbit": it's short but informative.
I am Chinese, so I do know about moon rabbits and such, even if I do not have thorough knowledge of this stuff, since I only hear stories about it.
I believe I remember them having moon rabbits make the elixir for Chang'e in the moon in the Touhou setting. Or are you saying that this is just used as a reference? I thought that was the reason why Reisen II ran away, because she did not like such a monotonous job.
Except ONE small thing that you all disregarded.
In Cage in Lunatic Runagate (last chapter), when Reimu's absurdly brutal and horrible punishment is being described, one of the Watatsuki sisters (either the nice ponytailed one or the crazy tech-maniac one) says the following:
"It's the best way to show that you are able to summon the gods. We don't like killing here so it's the most serious punishment you will receive. Once you've finished, you may return to Earth."
I did not disregard that. Just because they
say they do not like killing, it does not mean they do not
do it. My comment is more on the lines of Lunarians having better technology than humans by far. So, as far as executing someone is concerned, they likely have more ways to do it.
However, the only thing given to us is that Kaguya was executed repeatedly, but we just don't know what the various ways are or how it was done or whether it was "brutal" or "clean". In this regard, we cannot say whether Kaguya's execution is any less or more horrible than other executions.
Also, do note that it isn't like Reimu does not have friends. Yuyuko and Youmu are there watching the Watatsuki sister's actions. What the sisters really want to do, I don't know, but there are consequences on their actions if they are reckless.