Putting up https://www.fimfiction.net/story/331488/an-embarrasment-in-three-acts for your consideration.

In answer to the three questions:

1. The main characters would be the six Elements, while secondary characters of significance would probably include Bonbon, Luna, Double Dash, and possibly Dinky.

2. Not a great deal of character advancement here, as it's mostly a light-hearted "breather" episode. Nonetheless, having to deal with the play's ridiculous portrayal of them may help them develop their social toughness, which Trixie at least is going to need down the line.

3. As far as effects on the wider Lunaverse, there shouldn't be too much of an impact beyond the Elements getting a minor windfall. There might be political fallout as the Elements try to deal with this nonsense being written about them, but I haven't 100% sorted out what I want to do with that.

5267856

That was the idea behind it, yes.

Act 1 is up!

EDIT: And Intermission 1 has now been added.

Ok, now that the entirety of An Embarrasment In Three Acts is written, I would like to officially request a ruling on its canonicity.

In terms of impact on the rest of canon, the main ones are 1) This play is going to stick around, and various misconceptions (Ditzy being a Shadowbolt, Trixie and Lyra being lovers) are going to creep into the popular subconscious. I would love to see these things pop up at random in other fics. 2) On the bright side, this play also conveys a lot of the true Luna/Celestia relationship, and does so in a way that's much easier for the general populace to understand than The Symphony For Moon And Sun. This may prove helpful to the Celestial redemption arc. 3) The Elements will each get a moderate amount of money from play royalties. This can be used if we need a justification for one of them making a major purchase or expenditure, or just disappear into a general background increase in available funds.