At the end of the film, Ash says that she will choose to play the game by her own rules. Before that, she only played the war game (VR) by her own rules (playing solo, and controlling which scenarios she played. I think it’s symbolized by the grey streak in her hair) But the Bishop not only played the VR game by his own rules, but included reality (R) in his game, manipulating Ash and Stunner both inside (VR) and outside (R). Special A (SA), also known as Class Real, is presented to Ash as yet another world she can exist in. This is where my ideas kind of split. If you believe that R is the real world, though stylized, you can stop here. Ash realizes she doesn’t need the game (VR) anymore, and chooses to play in R.
But, what if SA is the real world? And really AI’s, suggested by Tom Box? I would not be at all suprised if this was Oshii’s intention. Remember, he did direct Ghost in the Shell, which questioned the definition of life and humanity. Other films, including Dark City, The 13th Floor, and The Matrix ask the same question. For this argument, I will focus on The 13th Floor. WARNING: SPOILERS FOR THE 13TH FLOOR FOLLOW. That film also showed 3 different worlds: the character’s world (R), the virtual world (VR), and the real world (SA). The protagonist, living in R, has created VR. He then discovers that he is merely a “player character” (forgive the RPG lingo) in his own virtual world, and that the man the plays his character has been using him to play in VR. Our protagonist escapes R by entering the body of his player in SA. The 13th floor could almost be a prequel to Avalon. Ponder this: After events similar to The 13th Floor, the people of SA outlaw the playing of VR while in the world of R, as it makes the AI’s (including Ash, Stunner, and Murphy) concious that they themselves live in a game. Bishop, who probably an admin of R, acts like he’s playing a game while in R. After this you can pretty much follow the ideas Tom Box laid out.
Still following the above paragraph, there is another scenario. The world of R and SA are almost indistiguishable from each other to the casual observer (like Ash who’s mind in preoccupied with VR). Perhaps Ash is ALREADY one of the Unreturned, and has gotten lost in the “waiting room” of R. That is why the Avalon VR is illegal, is keeps the players from being able to leave R and return to SA. The Ghost is a loophole in the system that allows her to get back out.
And working with that idea, compare it to the film Brain Scan. WARNING: SPOILERS FOR BRAIN SCAN FOLLOW. SERIOUSLY, THE FILM’S AN EXCELLENT THRILLER, AND WILL ONLY HAVE ANY IMPACT IF YOU DO NOT READ THE REST OF THIS FIRST!!!!!!!!!!
So, now that you’ve watched Brain Scan, I don’t have to bother summarizing it for you. The game doesn’t end, it keeps going all the way to the very end of the film, yet only lasted a few hours despite lasting several days within the game. Perhaps the entire film Avalon is the game, and Ash has been playing it so long that she has forgotten what reality is? The uncanny assotiations between the different worlds (R, VR and SA) exist because they’re all being played inside her own mind, and the game uses her memories to craft the world (See Brain Scan). And the game is trying to get her to complete it [the game]. It gets rid of her dog, hinting to her that she isn’t in reality yet. It creates the Bishop to guide her. She finally gets to the last level, SA, and returns to the real world when she shoots the Ghost. Wrap your minds around that!
This last is the plot that I am going with, although I can say with certainty that Oshii intentionally made the film’s “reality” vague. He has given us the freedom he gives Ash at the end of the film; we can play the game by our own rules, now. With Avalon, there are no wrong conclusions, as long as they’re our own.
For reference, you should watch Oshii’s early live action film trilogy. They consist of Red Spectacles, Stray Dog, and Talking Head. I don’t think Avalon would be as good as it is if Oshii hadn’t experimented by making these films. And of course, Ghost in the Shell. I also mentioned Dark City, The 13th Floor, The Matrix, and Brain Scan. They are all along a similar vein to Avalon, though The 13th Floor and Brain Scan are closest.