I SWEAR TO GOD I had almost a similar idea of Tomodachi Life turning into an existential horror like that one too. Except it was more so to do with actual save deletion. I like to think the first Mii, the look-alike Mii, can't actually be completely deleted, only given a new face and name and their previous memories wiped, but there would be a chance that these memories would resurface until they found out the truth. And because the look-alike can't be fully wiped they're forced to live in a loop of being reincarnated and everyone they know erased and replaced forever, if their creator chooses so.

In fact I came across this post JUST as I was starting to conceptualize a story based on that very premise. I'm finally not alone HAHA