oops i wrote a lot
The whole reason why the dream world selves exist as a thing is to bring out the most impulsive and extreme versions of those characters. Obviously it's hyperbole, that is the point. But it's hyperbole based on parts of those characters that already exist; you can't have a hyperbole without a baseline. With high consistency, the strategy of defending Byakuren tends to come down to misdirecting or downplaying the text and subtext that exists in the works. The act of making Byakuren's dream self what she is, and not something else, is very good quality evidence that what people have been reading for the past several years has not been coincidence or unintentional. The dream selves of every character are not very surprising as extreme extensions of themselves. I don't think much new information is being given precisely because I see these things as having already been established in one way or another. Claiming the dream world selves mean nothing just because it's funny hyperbole would be incredibly foolish and smells more like trying to ignore information because it doesn't align with preconceived notions, especially since it supports the readings of past works that also conveniently tend to be downplayed or dismissed.
It's not like I have any stock in Byakuren having some of these flaws and "need" her to be flawed because I want to keep that interpretation of her; that makes no sense, I gain nothing from that. I like Byakuren, I think she's complex and a very interesting character. Talking about character assassination seems to make the accusation that people are invested in bringing the character down or making others dislike her or something, when first of all I see no reason to want to bring her down, but secondly I don't think having certain flaws that make her a bit sketchy means that she's a bad character or that people should dislike her. That's a big difference to when people are defending a character they like, because that can look a lot more like they're actually defending their personal image of the character and their investment in that interpretation, especially if why they like the character is closely tied to the subject of criticism. Suggesting that other people are criticizing a character because they're somehow invested in that "negative" idea of the character, rather than it just being their neutral reading of the works, feels like projection. Meanwhile someone consistently dismissing what other people find worth criticizing and saying that's just their reading of the works, feels more like wanting to paint their vision of the character they like on the original work as though that's the true author intent, because they want their image to match the author's.
Relatedly, I don't think people disliking a character (or not being able to like a character) should be dependent on whether or not you dislike them "as a person". Particularly in Touhou, but kind of generally in media. It's part of writing narrative-driven fiction that you set up things so that the audience gets certain emotional reactions to characters that prime and cue them to how they're supposed to view the character. You're primed that the bad guy is the bad guy because they do bad things, as the most simplistic example, which is also why if the real bad guy wasn't someone you were primed to see as the bad guy, it's considered a plot twist. In these cases, especially in video games, the work benefits from you disliking the character "as a person" because the narrative is structured around those points, such as the resulting catharsis when a villain is defeated. But disliking the character "as a character" because you dislike them "as a person" is pretty much the most basic of reasons for dislike because all that happened is that you were manipulated by the writer to react how they intended. This is why disliking bad guys because they're bad guys is dumb and instead you hear people talking about how a character is or isn't "a good villain".
I think this is especially true in a series like Touhou; not only because everyone is kind of a flawed dick in various ways, but also because Touhou isn't even really driven by plot and doesn't largely depend on how the audience reacts to create its depth. It definitely does this on small scales, and in some cases when works have larger narratives like FS and Bougetsushou, but not to the extent that like, ZUN would be priming the audience for Kogasa to get her revenge on Reimu for beating her up after smithing her needles, for example. Instead we get things like Reimu gets her comeuppance for forming a get rich quick scheme and failing, because these are character points. So when I see people for example saying they dislike Reimu because she's a jerk, all that says to me is that they have only a surface-level appreciation of characters and the series.
Meanwhile, people can like a character for whatever the heck reasons they want. That can be based on liking them as a person or relating to them, but it doesn't have to; your like of a character can be as arbitrary as anything, and it doesn't have to be tied to the original work at all. Headcanon and interpretations in fanworks are perfectly valid justifications for liking a character and it doesn't even matter because you're allowed to like what you like for whatever reasons you want. This is why it doesn't make sense to me to dislike characters or not be able to like them based on their flaws or negative traits. It's all just a part of building well-written and complex characters, and the reasons you like a character shouldn't be negatively affected by other people pointing out their flaws in the original work, because tightly coupling your like of a character to how they are presented in the original work (especially an ongoing work) seems unhealthy and unstable.
Small essay? I'm also not accusing Paz of anything here, some of it might be on the mark or not, but I think he has fine intentions that I just happen to disagree with (you can reply privately to me if you want). I'm mostly 1) defending the dream world selves as meaningful, 2) defending my own criticism of Byakuren as neutral and not ill-intended, 3) arguing that presenting criticism of a character and trying to defend a character you like from criticism tends to have different levels of bias, and 4) miscellaneous commentary on liking/disliking characters in media and how it applies to Touhou because it's relevant to the immediate discussion and character popularity as a whole.