All valid points above, Aphrah, and I actually agreee with most of what you're saying.
Regards canon, there are two forms of interpretation: one is following Star Wars Expanded Universe, and the other is the Sunrise method. SW EU considers
all published works relating to Star Wars to have varying degrees of canon; the movies are Gold level, novels are silver-level (meaning pretty much canon, but things can be retconned later). This sorta works because there's a canon/continuity team that tries to check details in whatever novels that are published.
Sunrise follows a different interpretation, which is whatever is actually animated is canon, and novels are "official" but not canon; for instance, the Mobile Suit Gundam novel actually ends with Amuro dead, as opposed to the series where he survives (to die 13 years later
. UC. Born to die.) - so following this interpretation, the only things that are canon are the anime episodes.
I've chosen to interpret following the SW EU method, where whatever is published is canon - that said, has SAO remained web novel only, and we were discussing the web novel, I agree 16.5 woulda been canon. Once it moved from a web novel to published LN, however, 16.5 no longer became canon.
To fall back on my legal training, the light novels are binding precedent, which is true and correct and must be followed. 16.5 is persuasive, meaning that it's very convincing if you use it to support your argument, but doesn't have the full weight the rest of the LN has.
tl;dr: Strict interpretation, 16.5 is not canon, however it is
persuasive and I personally believe it actually did happen, given who we're talking about
And that's the trouble with SAO - this is a series that rewards observation, which is something most anime viewers these days are incapable of doing.
...man, I feel so old.
