This reaction of the protagonist is due to the fact that he essentially entered the world of Naruto from our world. And seeing fictional characters from his favourite anime fuck in real life is like "watching Naruto fandom porn on pornhub, but in real life". It's just a funny moment, no one is forcing you to consider yourself a cuckold because of it.
I can see that, the important thing that has changed is, that now Hinata turned from a "random" girl to a love interest.
As for the logic of the path of romance with Hinata and watching her as it relates, I'll explain. This is where you have to read into the story, although there could probably be problems with that, since before 0.10-0.15 the English translation was just awful. But we are working on replacing the translation, by the way. So, to go down the path of romance, you need sexual memories with Hinata to activate the power that Kamiko gave you. That's why you follow Hinata and Naruto to get the memories.
Not sure that makes sense to me, wouldn't it make more sense if the mc needed more romantic memories with Hinata, like eating noodle soup with her, complimenting her, buying her flowers etc. to get on the romance path? Sexual energy seems more fit for the more secual corruption path. But maybe things will be more clear once I read the respective dialog.
Of course you may have your own point of view on this topic, but at first the main character is getting used to his new surroundings, this world still doesn't seem so real to him. So watching Naruto and Hinata is not such a big moral problem for him, they are the heroes he jerked off to while sitting at home.
The important difference is, that when you watch that fandom porn you imagine yourself to be the hero, the person to do the fucking, not to be an observer. (At least that's the way it is for me and based on what I read on the web for many others as well). The moment the MC entered the world of Naruto as his own character, that's no longer possible because he would be two characters in the same "story". Same applies to me as the player in general for all the games out there with a Main character. If you play as the MC you are the MC and none of the other characters in the game. And for those "not interested" in watching others have sex, any sex that is not with the MC is "not of interest".
Having said all that, these are my personal thoughts as an individual player.
Develop the game as you see fit. If it matches my taste, I would be happy, but if it doesn't, it will fit someone elses.
