I am afraid we're looking at this from different perspectives, because to me, "just like an AU fanfic" is an argument against, not for.

I will allow it this year because it seems like enough people are interested in it & have a shared understanding of what it means that it is not going to cause problems later in the exchange, but will probably specify more strictly next year that characters have to appear in the fandom or be positively implied to be there, rather than "we don't know they can't be" or "this is a common fanon character".