First, I think most people know that Pete is bluffing. If King *were* to accept Pete's offer to become a human again, Pete would probably not know what to do. (Unless my loop theory is correct.) I don't think Pete would panic, but he would be confused for a moment and try to convince King not to change back.
Now that that's out of the way, here's what I think should
Situation 1: King calls the bluff and summons SD & GK to report Pete's violation of the non-interference policy. Because Pete has broken the rules too many times, he forefits the duel. He lives his "mortal life" as King's puppy son. (Not my original idea and I don't claim credit. I forget who came up with the idea, but I like it.)
Situation 2: King agrees to become Pete's avatar on three conditions:
a.) King must be allowed to choose at the end of the game which body he will remain in (human or corgi)
b.) Bailey must also be allowed to choose between being human or dog.
c.) King must be allowed to choose the type of game the duel will be.
(Remember this is PG, so a death-match probably won't happen. One of the rules in the fanfiction section of the forum is that PG can include death, but it can't be too graphic. And since a death-match is graphic, it probably isn't PG, which means it can't really be an option for the comic.)
Now, with all that said, here's what I guess will probably
King, being too dazed by Pete's trickyness, will accept Pete's offer to remain as a dog, and will become Pete's avatar unconditionally. King is too confused at this point to really make a solid argument.
Game Cobra wrote: in my opinion, there is the distinct possibility though that if King does return to being Joel, Bailey will be more willing to forgive Joel than Fox if Joel explains everything to her. Fox might have a grudge against Joel, but not Bailey. Even if she fell in love with King. Whose to say Bailey is much more forgivingthan any other dog out there?
I would love to see a "Look into my eyes and tell me if you know me" moment. (No, I don't actually want to see it, it's just neat to imagine it.) Then as Bailey stares into Joel's eyes, a look of recognition dawns on her. "King?" she asks. Joel nods, Fox feints, the jaws of the K-9s hit the floor, Bailey jumps on Joel, hugs him, and cries. Suddenly Keene speaks up. "You know, if one you both still want to be together, I have something that might help." Keene pulls out about five mana orbs...