It counts! If the prompt takes place in the Index, it can be used within game canon. Princess and the Frog section in the TDM would not count, but you are allow to alter them into something like a "stage play" if you happen to like where the thread's going and keep the interaction.

Uhh man, the arena comes supplied with everything from health potions to monster opponents, but it lacks in the extra clothes department lmao. They'll work something out.