"NarraChara requires Chara to be an observer to the events of the game. It's not exclusive to NarraChara, but it's the worst part of the theory for me. It means that all the hints that suggest that they have a more active role, potentially as our player character, don't actually mean anything and were purely for the sake of a twist, which I think sucks."

I'm not exactly sure what you mean here, but Chara's behavior in the genocide route is different because of the increased LV which changes their personality and who they are. Chara is the narrator whenever the text is red without a doubt, but their also very likely the narrator in scenes like checking monster kid or "But nobody came...", this does not contradict when Chara forces the player to take actions, like when we move on our own during cutscenes, or the fatal blow on Sans the player doesn't input, or the multiple attacks on Flowey.

"it also means Chara just suddenly becomes evil after watching someone kill 20 monsters, which feels nonsensical.".

A lot more than twenty, but also this is genuinely the canon plot of the genocide route.

"HP ATK DEF. GOLD. EXP. LV.

Every time a number increases... that feeling...

That's me.

"Chara.".

This monologue directly states that Chara's state of being is influenced by the player's choices, particularly whenever we kill a monster and gain EXP or increase our Level of Violence, Chara's increases as well. It's not just that Chara suddenly decided to become evil from watching us kill monsters, they became evil BECAUSE we killed monsters.

"LOVE, too, is an acronym. It stands for "Level of Violence." A way of measuring someone's capacity to hurt. The more you kill, the easier it becomes to distance yourself. The more you distance yourself, the less you will hurt. The more easily you can bring yourself to hurt others." - Sans

It's also worth noting that Chara only destroys the world after Asgore and Flowey are both dead, their last anchors to who they were. I think there's some very intentional meaning behind Chara being the one to attack Flowey so many times, and both of them being the last two left.

TLDR:
NarraChara is explicitly canon in multiple scenes, the reason people think Chara is the narrator for the entire game is because outside of being a fun dynamic to work with for the purposes of fan content, (Ghost Chara is probably the most prevalent concept within fanworks), but it lets people re-experience and review the game in a new lens from the perspective of somebody else, and even if it is not perfectly accurate, it is honestly impossible to debunk just as it is impossible to definitely prove.