At some point we will also need to talk about the fact that HC is a shape shifter and what this means for how he sees himself. That his first instinct was to conceal his true face, not his identity. Even if he chose to show up in his true form, XL wouldn't have known who he was.
HC knew that, and if he wanted it, could have hid his identity. But he simply didn't want to. He made absolutely no attempt to throw XL off the trail, and was even surprised when XL didn't want to question him further in the Sinner's Pit. But he took pains to hide his real face.
He made sure to appear as non-threatening as possible, but also took an appearance he thought might be somehow more attractive. He WANTED XL to know who he was, knew XL would figure it out sooner or later, but showing dianxia his real form? That seemed like too much.
The citizens of Ghost City, in centuries of HC presiding over it, never actually got to see their lord's true appearance either. Even if there were likely many people (like heavenly officals) who did know what he looked like, HC never "wore" his face in public.
When he stepped out in his true form in the Gambler's Den, it was a surprise to everyone. How very curious that HC didn't even feel comfortable or confident enough around the other ghosts before to do that.
He was so often in a different appearance--what does that do to someone's self-image? Nothing good. Even in private, did he don a different appearance for himself? Something tells me there were no mirrors in Paradise Manor, so he wouldn't have to confront that.
HC knows empirically that he is attractive. But he so deeply hates his face because of what it represents: a monster. A failure. Useless trash. No matter how good puberty was to him, the scars of his childhood will never fully heal. He will carry those words with him forever.
HC is fascinating because he simultaneously knows he's the best, because he made himself into the best through centuries of work. At the same time, he also thinks he's an undeserving monster. Even when MQ calls him disgusting in book 3, HC does not refute this.
Or when BWX calls him an "ugly toad." HC actually never refutes anyone who comments on him in this manner (i.e his appearance or his intentions @ XL). He even calls himself crazy many times. He'll only refute people if it's about his skill level. It's... shockingly heartbreaking.
Which is why XL, and how XL treats him, is SO important. When HC was a child, XL was the one who held him close and told him that he was not a monster. Since his mother died, when was the last time HC was consoled? Loved and held? Adults terrorized him, instead of protecting him.
Made him beleive he was worthless, a curse. But XL (only a teenager himself at the time) knew he was innocent and deserved kindness. He was ready to protect Hong Hong-er, regardless of what others thought. The scene where HC sobs in XL's arms is so.... He just wanted to be loved.
HC even then thought himself as being unworthy, and didn't dare risk XL's well-being, so he ran away. But he would never forget XL's compassion. He would continue to yearn, as his feelings developed into romance as he grew up. But he would always be afraid of burdening XL.
HC doesn't dare make his issues of self-resentment known, because he doesn't want to put that on XL. So XL telling him things such as "it doesn't matter what you look like" and "what matters is you and not the state of you" is so crucial and earth-shattering for HC.
XL treats him considerately and with humanity at every turn. XL aggressively humanizes him!! Despite HC seeing himself as this monster unworthy of XL's love. We talk a lot about what HC does for XL, as his truest believer and someone who never undermines his dreams.
But equally important is that XL sees HC for who he is -- dangerous and all -- and loves him for it. Him finding HC's true form to be genuinely and incredibly attractive might see minor in the grand scheme of things, but for HC, that is HUGE.
Because with how much XL means to HC, he was *most* nervous about showing his true form to XL than anyone else. Of being rejected and thought of as ugly all along. Even if he knew he wasn't, it didn't mean he was unafraid. XL loving every part of HC that HC hates is powerful.
I just want to restate it once more: HC having that moment of vulnerability and showing XL his true form, and XL not only accepting it but finding it to be the best out of anything HC could shapeshift into --
-- that means a lot to someone like HC who has lived centuries trying his best to look like anything other than himself.

We often gloss over HC's self-esteem issues because to us, he seems so perfect and wonderful. But they are always there, lurking. Like all of ours.
Having someone in his life who is there to reassure him is fundamentally life- changing, and over time I do beleive he would begin to truly heal from all the trauma and self-hate. Even if it will never completely go away, he doesn't have to carry the weight of it all alone. ;;
**I also want to make an addition courtesy of @/LovTitania that: there may very well be many mirrors/reflective surfaces in Paradise Manor because that's how the self-hate, self-harm, dysphoria cookie crumbles ;;;;;;
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