I know you're an expert when it comes to SAO, so I have a question: Is 16.5 canon or not? I've heard it was in the fanfic section of Reki Kawahara's website, but it has been suggested that it happened across multiple media of it(kind of got the feeling from Chapter 16 of the light novel as well). Was it ever confirmed as non-canon, or have others been right labeling it as canon?

16.5 and 16.6 are the tail end of a whole slew of stories Reki Kawahara did under his pen name.  It includes such things that happen in the main series but aren’t shown like kirito and asuna’s duel.  And things that don’t like early character designs and stats.

Most fans agree that the actual 16.5 is non-canon, but them having sex is, as as you say, it’s suggested across almost all medium.

Kawahara is pretty embarrassed that 16.5 is general knowledge, I think he’d just rather it never existed.  It was certainly never meant to be in the regular Material editions.