This is kinda difficult to make, given the character's background, but I'm wondering what would it take to turn Crystal Prep's principal (or former principal, depending each one's canon) into a nice person if given the chance in a fic?

I think that the first step would be to make her somehow more sympathetic. Give her a good reason to be putting so much pressure on the students to excel, for her to go so far as to blackmail Sci-Twi. Only when she becomes sympathetic can she be prepared for redemption.

An example situation: Perhaps multiple families who fund the school are threatening to withdraw resources if the atmosphere of bullying, which has threatened to tarnish the school's reputation, is not remedied. Perhaps nothing else she's tried has worked, and the Friendship Games are her last chance to return the school to its former glory. The logical progression would be, in the wake of said Friendship Games, Cinch swallowing her pride and looking to Celestia and Luna both for advice in turning things around, and only through their help, she sees how stifling the school policies are, and how much antagonism it encourages among students.

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Give her a backstory.

There was actually a story that SORT OF reformed her, or at least made her less nasty. It's Reformation Brigade.

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Well. I think they need to know her that isn’t the former Principal of Crystal Prep. I imagined a EQG episode where a wisp of Equestrian Magic transport the girls back in time, back where Granny Smith is an young adult and the teachers and principals they know were students. They’ll might freak a bit knowing that there is no WIFI and Rainbow’s accomplishments haven’t been made. They’ll met someone who was doing some conspiracy research which got Sunset’s attention since it had pictures of Equestrian creatures. Her name is Abby and she believes that anything from Equestrian is evil which made Sunset argue that it isn’t true but she’ll say that why have they been sending things to our world and didn’t think about the human lives which will shut her up and realized that is true. That’s just my opinion but its your decision