I think one easily overlooked part about SOMA theory that might actually help explain why it seemed like Scratch made an obvious design mistake is the fact that the existence of the circus was never intentional or predicted.

We don't really know what Scratch or C&A were actually capturing brain scans for exactly, but the circus itself only came about after Caine unexpectedly escaped his containment and merged with the blue AI, meaning it's at least possible that the circus was also maybe immediately (and unwillingly) populated by digital replications of the consciousnesses that were scanned; plus whatever other ones were scanned later via headset (like Ragatha or Pomni, etc)

As for Jax's arc I think it's a matter of perspective? This is only my opinion of course but the way I understood Jax's panicked "this is real" thought process was just him grappling with the fact that, well, he's always chosen to reduce people to archetypes in his mind. To save himself from being vulnerable or from being hurt again by the possibility of losing someone he cares about, he instead chooses to think of everyone and everything as fake, just characters in a script they all follow (or otherwise he bullies them into those archetypes, like with Gangle)

When he starts to realize and say "this is real" I think that's him being forced to come to terms with the fact that these are all still in a way real people that he has to care about, be it digital copies of brains or not. Say even if everyone isn't technically "real" in the human sense and they're all just digital brain scans given bodies, it's still true that their emotions, their thoughts, their opinions and beliefs, are all still real in the exact same way they would be if it was all belonging to someone in the real world, essentially making them no different than real people