I made a short post awhile ago about "what if Pegasus adopted Seto and Mokuba instead of Gozaburo?" Obviously this requires Pegasus and Cecilia to be a bit older than canon, but just roll with it.
I'm probably not going to ever write this fic, but this is the closest to Pegasus redemption that I'll ever get to, so here's the rough summary of what the story would have been.
"According To Plan"
Pegasus and Cecelia go to the orphanage where Seto and Mokuba are on the same day that Gozaburo visits and end up adopting the brothers. Cecelia likes the idea of adopting a pair of brothers because she knows they have tough odds staying together otherwise. Pegasus sees Seto confronting Gozaburo Kaiba and is aware of the man’s reputation for cruelty and decides in that moment that there’s no way he’s letting Seto and Mokuba go home with Gozaburo. He says that he won’t stop Seto from playing chess with Gozaburo, but the outcome will not determine who adopts him (or maybe that scene goes differently, but the point is, they still play chess and Seto still wins, but doesn’t get anything from Gozaburo). Seto still invents his holographic technology and Industrial Illusions becomes an absolute fucking Nintendo, but Gozaburo never dies and is forever butt-hurt about losing that chess game to a child, and as a teenager Seto formally steals the title of chess grandmaster from Gozaburo. Cecelia still dies and Pegasus doesn’t fall apart because he has Seto and Mokuba to take care of. When Cecelia dies, Seto is still very distant from Pegasus, but after losing Cecelia, Seto breaks down in front of Pegasus and finally calls him father, and that’s the moment where Pegasus is resolved to keep it together. Cecelia loved these children, and he has to love them enough for both of them. Pegasus starts homeschooling them so that he’s giving them the most attention and care, and this includes traveling the world together as part of their studies. Both kids also take a lot of interest in Pegasus's work, Mokuba mostly in the monster design part and Seto in the actual business management. Pegasus takes Seto and Mokuba to Egypt on a homeschooling trip, and their first night there, Seto has a weird dream (induced by Millennium Items or Shadow Magic or proximity to ancient shit) that he doesn’t want to tell Pegasus about in detail, he just says that it's weird and he seems on edge because of it. Pegasus still gets the Millennium Eye from Shadi, and young Seto meets Shadi, who sees his potential but tells him that he’s not yet ready for the power of a Millennium Item and to return when he is an adult. Pegasus immediately takes Seto and Mokuba home to Japan. Mokuba did not meet Shadi, and Seto never forgets about that day. Seto does become the Duel Monsters champion, and then his champion status is taken by Yugi Mutou, who bears a Millennium Item. This makes him want to go back to Egypt so that he can claim the Millennium Item that Shadi said he was destined to possess. He thinks doing so will make him more powerful and let him beat Yugi and be champion again. Duel Monsters was how he and Pegasus and Mokuba all coped with Cecelia’s death, so having that champion title taken away from him when it meant so much was a hard blow. Pegasus forbids him from returning to Egypt, and Seto asks if he thinks he can really stop him. Pegasus says that he knows he can’t (he’s not going to keep him prisoner by freezing his assets, even though he knows that's an option), but pleads with him to reconsider because he has no idea what he’s getting into. Seto says that he’ll consider his words, and Pegasus can see that that’s the best answer he could hope for. He can't control his son; he knows that Seto is driven and headstrong. He can only hope to guide him down the right path.
