I think it can be valid as a form of entertainment - I tend to enjoy participating in collaborative works like round robins for fun, and I can see this being fun in a similar way - but it's generally not the kind of story-telling I'm interested in when I go looking for fanfiction or similar. Also because reviewer-generated character chapters end up being a huge competition of Sues, or the author is just using it as an excuse to be really lazy.
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