I have been reading my son The Lord of the Rings while rereading Mirage of Blaze myself, and this has led me to the thought experiment of how Mirage of Blaze would be received as a story in Middle-earth. The answer, I believe, is not as badly as you might think.
(In case you have been residing under a rock, SPOILERS follow for The Lord of the Rings. General Mirage spoilers, nothing too plotty.)
Mirage of Blaze, or The Private Lives of Wraiths:
There is no question that Japanese culture (whether Sengoku or modern) is enormously different from Middle-earth in any era. And yet, there's enough commonality for Mirage as a story to have traction—and enough difference for it to be mind blowing.
In the broadest sense Mirage is an epic war story, and Middle-earth understands an epic war story perfectly well. It is no stranger to expansive, multigenerational battles over which noble houses are going to rule realms and how. Middle-earth understands class; it understands loyalty to one's lord. More than Western society in general, it understands profound reverence for one's elders—this comes, in part, from Elvish influence, I think.
And speaking of Elves, Middle-earth would also have very little conceptual problem with kanshousha, because Elves kind of do this. If they are killed, they can sometimes be reborn and pretty much continue their same lives, memories, etc. The difference is that they aren't forcing out any other soul; they are simply rehoused in a new body. (And, of course, the idea of a definably separate body and spirit is standard in Middle-earth cosmology.)
Middle-earth also has onryou, vengeful spirits who have not properly passed on after their deaths. They are called wraiths. An example of a basic Middle-earth onryou would be a Barrow-wight, spirits still hanging on in their tombs and causing problems long after their deaths. Middle-earth also has onshou of a sort: the Ringwraiths fit this description pretty well, though they differ from the average Mirage onshou in having their consciousness enslaved to a more powerful spirit (Sauron).
And that's the key difference, the possibility Middle-earth does not account for. While the average onryou might well resemble a bitter, semi-conscious Barrow-wight, there's a whole class of onryou who are basically fully conscious, psychologically complete human beings who function just like any other human being, except that they've been separated from their original bodies and have magicky powers and such. Where Middle-earth expects a Nazgul, it is presented with a Kagetora—even Nobunaga is a free-thinking, human type of wraith with a personal life and human problems. And that idea would be revelatory.
So Are You Crazy, Asks Sam, Because You're a Wraith?
Let's make it more specific. For this particular thought experiment, I have picked on a middle-aged (post-war) Sam as putative listener to a read-aloud. Yes, reading Mirage of Blaze aloud to hobbits!
Now, Sam—even middle-aged and with thirteen children—would have his ears just about fall of his head if someone read him Mirage volume 20 (and I confess I have had this fantasy; my mind is strange). I don't even think it would be a question of disapproval so much as absolute inability to take it all on board. The homosexual sex would just confuse him.* And so would the rapey-ness. But he would certainly conclude that these people have been driven completely, rapaciously mad. And in fairness, he wouldn't be totally wrong.
The whole Mirage scenario would be extraordinarily uncomfortable for Sam, not just because of the porn but because he could not miss the fact that he basically maps to Naoe. Sam knows what it is like to be so devoted to your master that your entire life becomes about supporting him. Granted, for Sam, this was only about six months of his life, and he fairly rapidly returned to a life context of various, balanced responsibilities, in which his duties to his wife and kids soon became preeminent. But his love for Frodo is, nonetheless, a driving theme across his life, from his pre-war devotion as a servant (Frodo is the best hobbit in the Shire) through the intensity of their brief but life-altering war experience to feeling "torn in two" when Frodo leaves, all the way to the supposition that an aged Sam does finally go West to meet him again.
Yes, Sam would have no difficulty whatsoever with the basic concept of Naoe's devotion to Kagetora, and would have a fair degree of sympathy for Kagetora's need for Naoe. He would, however, be utterly horrified by the paces they put each other through, not just the sex but the violence, the nastiness, the manipulation, the (mutual) domination. There is no question their relationship is sick, and this would be Sam's primary impression of it.
But why is it sick? How did it get that way? Well, mostly because they've been stuck in this punishing life for 400 years, or, as Bilbo might say of his years with the Ring, they've been stretched like butter spread too thin, pushed beyond the proper limits of a human life in something like the way Gollum is, minus the ontological "evil." In a word, they're fucked up because they're wraiths—which makes Middle-earthy sense: wraiths are always fucked up. They are, in broader Middle-earth cosmology, a fairly weighty example of Arda marred, of the strain of corruption that permeates creation (unless you're Tom Bombadil).
This is what can happen to you if you're stretched too thin. It turns Frodos and Sams into Kagetoras and Naoes: that's what Sam would have to think. And it might give him something of the disturbance Frodo had in having to learn to see himself in Gollum, or the Gollum in himself. It would necessarily put Sam in mind of the Ring. There is no equivalent "evil" in Mirage (I think), not even Kihachi's onnen, which just makes you poisonous; it doesn't make you evil. But Sam's nearest experience would be of the Ring, of seeing it work on Frodo and feeling it work on himself. He knows about slipping into darkness.
Still, what would blow his mind most is that idea that for all the darkness and craziness, these people are just people. They haven't been enslaved by Sauron or corrupted by evil objects. They're just on the path their strange lives have led them down. It's a path that goes to very dark places but can lead into the light again, in just the way the human mind is always capable of working. Sam wouldn't know quite how to process that. And it would leave him pondering for a long time.
On the whole, despite being shocked and horrified for much of the narrative, I think Sam would find it engrossing. It touches on a lot of truths and feelings that are very much part of his life and his culture and touches on them from such a new vantage point that it would send his thoughts reeling. (Plus, Sam loves a good tale. Even Gollum, he says, would be all right in a tale, so surely Naoe and Kagetora are passable.)
* A reader from a social context that accepts homosexuality as normative has to make a decision about how to read the apparently 100% heterosexual Middle-earth Tolkien presents. Personally, I assume homosexuality exists because humans exist and homosexuality is always present as a variant in human society. I see hobbits as sub-species of human. However, I also tend to assume homosexuality does not exist among Elves (sorry): Elves have a very different set of reproductive needs, accompanied by overall lower sex drive (much less of their lives involves active sexual relationships), and it seems plausible that homosexuality wouldn't figure in this. It wouldn't be needed to limit the population; low sex drive does that. It needn't be present as an outgrowth of sexual energy (not much of that) or other types of bonding because Elves usually bond without sexuality (even married couples usually only actively have sex/have children for a shortish period in their relationships—I am assuming Tolkien, as a traditional Catholic, did not posit they use contraception, so having sex and having kids go hand in hand). Anyway, Elvish influence is huge across cultures in Middle-earth, and I posit this contributes to silencing homosexuality among humans. What this would mean for Sam (who's straight himself) is that he's probably heard of same-sex acts in a snickering, whispering, tweenage sort of way, but probably assumes it's mostly just talk and, if real, very rare (and rather dirty—but not "sinful"; hobbits don't really have that concept in that way).