I am writing a series of interconnected metafiction stories revolving around epic fantasy tropes. The basic premise involves gradually building up an epic narrative and then breaking it down, and the interaction between the original story and the deconstructed one. As such, the fictionality of all the characters is very central, because the over-arcing story approaches them as ideas rather than purely naturalistic characters.
When I explained the idea to a friend of mine who's read at least as much fantasy as I have, she seemed to like it, but insisted that I should focus on the readers as characters. Her argument was that she has no reason to care about the 'first-level' characters, because, "you just told me they aren't real." What I got from that is that metafiction breaks suspension of disbelief unless it includes meta-characters as well.
This is hard for me to grasp because I never did believe that the stories I read are real, nor want to. Part of my ability to enjoy stories so brutal and violent, and characters so gray and unlikeable, is rooted in the reassurance that, well, no one's getting hurt. Needing to believe the reality of the story is an idea I have trouble wrapping my head around.
Is this a typical example of a YMMV (warning! TV Tropes link) reaction, or is it more a gap between reader position and writer position? If it's the former, I can accept that. However, if I'm being blindsided by my status as the author, that's a bias I need to try and fix. After all, what's fun to write and what's fun to read can be very, very different.
In summation: Do readers need the option to believe that the events in the story really transpired? Is the (fictional) author the real main character of my story, as opposed to the characters that he created? Do I need to Watsinate my story?