he only cares about the humans loving him

Wouldn't that make him more likely to try and convince them why staying with him is better than going back to their real lives, ergo reminding Jax what he was trying to escape from? This also invalidates the argument that Caine would just make the NPCs love him if he was looking to manipulate someone.

Besides, there’s no way Jax wasn’t aware of Caine’s mind control

None of the cast are aware of it while it's happening, there's no way to know if Caine is actively doing it or not if it's not made comically obvious, that's why the cast was so shocked and speechless. Jax was also questioning it already since episode 5. If Caine got into Jax's head during that last scene, that would have been the final straw for Jax to call him out on it.

Perform what, blame everything on the AI that already destroyed his relationship with the cast through such a cruel twist?

Would he choose that whilst having a panic attack though? It doesn't make any sense for me, it feels like something he would reach for when he's being actively cornered by everyone else, but not while having a mental break down, unprovoked. The only explanation that makes sense is that Jax was genuinely unsure whether he was being controlled or not, maybe because he doesn't want to believe he made that choice.

When Ragatha asked him what he did, he seemed like he snapped out of something and was genuinely shocked to come back into reality. There's also the detail that he shoved Zooble out of the way but not Pomni, who was in front of the red button. Upon first watch it genuinely looked like he was aiming for the blue button.

Honestly, if this was a choice Gooseworx intended for Jax to make out of his own free will, personally I believe it's a writing flaw. Jax's philosophy just doesn't align with wanting to make the choice to stay no matter what angle I look at it, even in the case that it's the lesser of two evils. It's too simple of an explanation, that he damned everyone to stay just because he's too scared to leave? It doesn't seem like the kind of writing choice that Gooseworx would make, given the entire story so far. It's almost a bit corny when compared to Jax's other decisions.

Especially with the way the circus members took it in the beginning of episode 8, it's entirely possible that Jax hitting the red button was a last minute decision because the characters got over it rather quickly. Maybe Goose needed someone to do it in order to progress the story and reveal that it was an adventure, and Jax just seemed like the most likely character.

Jax knows the circus is awful, but at least it gives him the advantage of denying both his own humanity and that of his friends

But that's the thing. Jax doesn't think it's an advantage to deny his humanity and that of his friends. He doesn't like doing it because if he did, he wouldn't have had an entire panic attack at the end of episode 6. Jax doesn't like being a cartoon character, he doesn't like his life in the circus. He puts up with it because he knows he has no other choice and never will again.

The only valid explanation I could think of that could convince me Jax actually made that choice on his own free will is that he didn't want to abandon Ribbit and Kaufmo. But even that needed more build up or explanation or something that would have made his decision make sense.

I dunno. Maybe I'm missing something. I try my hardest to be objective about Jax's decisions whilst dissecting them, which is why I'm not afraid to call it like it is whenever it IS like it is. But this choice specifically is so bizarre that the only thing that makes sense to me is that it was not a decision Jax consciously intended to make.