Well, it could be the unique atmosphere it creates. In the 'best jumpscare amnesia custom story', the setting is often dark and mysterious. The unknown elements lurking in the shadows add to the sense of dread. Plus, the sound effects play a huge role. The eerie noises that build up tension before a jumpscare are really effective in making it terrifying.
Frodo could be one. Since he was also closely associated with the ring in the original story, he might play a role in this fanfic, perhaps as a supporter or someone who has doubts about Bilbo's ability to destroy the ring.
One way to develop Bilbo in this fanfiction is by exploring her femininity. She could bring a different set of skills or qualities. Maybe she has a better intuition or is more in tune with nature. As she goes on the adventure, she could use these qualities to her advantage, and this would not only help in the story's progression but also in her own development as a character. For example, her intuition could lead her to find hidden paths or sense danger in a different way than a male Bilbo would.
One idea could be exploring the backstory of the mansion itself. Maybe it was once a normal house before the spooky events started. Another could be focusing on a particular character's experience inside the mansion, like how they deal with the constant jumpscares. And a third idea might be to create a story where the characters find a way to break the curse of the mansion.
A brave and curious journalist could be a main character. They are always looking for a big story and think the mansion is their ticket to fame. Another could be a paranormal investigator who has been studying spooky places for years. And a young, adventurous kid who got lost and ended up at the mansion by accident.
Maybe Gandalf could help. He's wise and might have some knowledge about hair - cutting. Or perhaps one of the dwarves, like Thorin, who could offer some practical advice or even do the cutting for Bilbo.
There could be the company's CEO, who might be initially hesitant about adopting Bilbo but later sees his potential. Another character could be Bilbo's mentor in the company, someone who helps him understand how things work.
No. Fanfiction that involves abusing a character like Bilbo is not ethical. Bilbo is a beloved character from Tolkien's work, and creating scenarios of abuse goes against the positive values of the original story.