As far as Luna laughing goes it would depend on circumstances. I kind of expect that the MC will be going up against his father and his new found family at some point later in the game. So if it was a situation where she ended up helping out the MC I can definitely see her laughing about it probably apologize after but definitely laughing about actually killing his brother. It's not like the MC has a lot of love for people he has never met or the Father he barely remembers.
I understand and I agree that Dominico does set up as a rival. The showoff vs the underestimated it makes sense. But that early internal dialog by the MC says he already thinks he's better. It just seem like Hopes gave us a hint early on that the MC is far more advanced than we know. Which is why I said I can't really see him as a rival. I think it will be played up and at some point they will face off, but if the MC already thought that he was beneath him than it's not really a rivalry. The MC will always make it look like he just barely came out on top that's his way. Like you said we will have to wait and see, and obviously Hopes is the only one who knows what will happen.
I think in my eyes, it's not really the case of how MC reacts, but more so of how Luna starts being more aware of and being considerate of how MC might feel.
Remember that scene in Beach prison event where Luna stops Gracie (obliviously) digging into MC's early childhood too much (saying "Gracie! He said another time!") because she is aware of the painful childhood with the "mom issues" he has?
Also, there's the scene with Jalen which she picks up on at the end of their meeting when he says "If your Family has malicious intent towards the MC with your contract, I will be there for my brother whether it's myself or with my family."
Gracie didn't catch the meaning behind the words, but Luna saw the meaning behind it all and understood Jalen's intentions.
Above two cases show Luna is very considerate towards what may impact those closest to her, and can be sensitive towards what others may go through.
So perhaps it's just me, but even if she fights against MC's Family (whether it's father or brother) and ends up killing them, I just don't see her laughing.
Perhaps Gracie would, considering she's shown to be less considerate or sensitive and in awareness to in above 2 situations (though with Gracie I guess lack of social interaction comes as a huge factor), but with Luna I think if she comes off laughing, in my view it would really contradict the compassionate side of hers we've seen, especially considering MC is no longer a complete stranger, and is now someone who is in her circle of trust (and even loves), and that feels very much like a regression in character depth if I'm being honest.
Because initial impression we (and MC) have of her is the "crazy girl who likes killing and takes joy from it" but we've come to realize she's so much more than that.
To see her react that way after killing off someone in MC's Family (regardless of how MC feels about them), well my reaction would be disappointed to say the least.
For me, if she does end up fighting and killing any of MC's family members, I'd see her to do it in a more solemn way, and without jokes.
With Dominico, yes that is what MC thought looking at Dominico sparring. But just observing and actually fighting are 2 completely different things (I mean one can look at a fighter and think they can take this guy on, but actually get into it and find out that he's much more than expected).
We've only seen one very short training scene with Dominico, and we (and MC for that matter) don't know yet what Dominico is capable when pushed to his limits.
And that will actually happen to MC as well. Right now, he's barely scraping by making himself look weak using cunning and tactics in his fights, but that can only go so far. He'd eventually (sooner or later) be pushed to reveal what he can really do, and perhaps both MC and Dominico will end up in a situation where they are both pushing themselves to their limits in a competitive way as rivals (with both of them one-up each other along the way on their rise in ranks).
Well, at least that's how I think may go down anyway lol.
But as said before, all conjectures from my end. Gotta know much more about Dominico before I can make more of solid opinion on him.