As of now, Uta is indeed alive. The story hasn't depicted anything otherwise. Maybe there'll be changes in the future, but for now, Uta's part in the manga continues with them being alive.
Their relationship could start with Uta being initially distrustful of Luffy. After all, Luffy is a pirate and Uta has her own ideas about pirates. But as she sees Luffy's pure heart and his determination to protect his friends and pursue his dreams, she starts to warm up to him. They might then become friends who share their different stories and experiences.
I'm not entirely sure about the specific plot of 'sakura no uta visual novel' as I haven't played it myself. But generally, visual novels often revolve around character relationships, personal growth, and some kind of story set in a particular world. It might be about love and friendship set against a backdrop of cherry blossoms, given the 'sakura' in the title.
Yes, there are many interesting Uta One Piece fanfictions. Some focus on exploring Uta's backstory in more depth, like her relationship with Shanks before she became a famous singer. Others might create alternate universes where Uta's powers are used in different ways to change the course of the One Piece story.
I'm not entirely sure specifically what 'oni uta visual novel' is about without more context. It could potentially be a visual novel related to oni (which often refers to demons or ogres in Japanese culture) and perhaps involve a story, characters, and interactions within that theme.