The idea for Squiggletown is for it start off as an interactive live cartoon series that Showfall aired in an attempt to gain a younger audience's trust in the Founder's works. Squiggles is used as the loveable mascot mc that he is to lure people in, meanwhile Hetch + the Founder are presented in a positive light as his friends.
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Founder and Hetch would have a tech piece, likely some form of bracelet, that they wear in their worlds (the real world, whichever generation they may be in) to temporarily transport their consciousness to Squiggles' digital realm & interact with each other to make the episodes. The audience could help make choices for Squiggles/ the trio via voting on a poll through the Showfall website while watching along.
The Red One (Redd) would be a late, unaccounted for 4th main character (since he makes a good bit of appearances from ep.3 onward) after discovering how to glitch into the digital plane (world hopping n' allat jazz). Redd would be painted as an opposing force to the main trio once discovered bc propaganda, sorry Redd :'( and accepting that he's probably not going to be leaving anytime soon. His ultimate goal is to stop the cartoon from continuing/ to get people to stop watching it.
Squiggles would try and befriend Redd for a bit when he first finds him, having no idea who he is and just assuming he was a surprise guest the other two hadn't told him about. Founder and Hetch don't like Redd. I imagine the Founder in this AU has a negative history with Redd, and Hetch has no clue who he is, but gets a bad vibe from him. Despite this, they reluctantly put up with Squiggles' schemes to befriend him anyway; both for the sake of the show & as an opportunity to distract Redd from his goal, which could potentially trap them inside if successful.
Eventually, Redd's presence becomes too threatening to ignore. Since he isn't technically supposed to be able to be there without one of the bracelet passes in the first place, the glitching of his character begins to spread to the digital world & alter its appearance when one of the members of the trio get within a certain proximity of Redd/ one of his 'plants'. While it's offputting for their audience, having been discovered near the beginning of an episode, it does lead Squiggles to Redd's base of operations in the woods near the outskirt of their little town. Ofc he brings Founder & Hetch to show them what he discovered, and they guide him to put two and two together that Redd is not one of them and ties past incidents to having happened only around when he started showing up.
From the rest of the show the trio begins formulating ways to try and get rid of Redd, or at the very least to slow down any of his progress. The show becomes more horror as it gets closer to it's 12th and final episode. It all comes to a head when the corruption spreads to one of the members of the original main group probs Founder but maybeee Hetch idk yet , leaving the remaining two to fully abandon their poorly maintained cartoony charade for the audience in order to try and reset their friend not knowing if it'll kill them permanently or not.