Analysis
Part 1: Blank (i)
- Context: Hollywood (i) _______ reality, "thereby completely altering not only past events but our perception of these events."
- Logic: The word must describe an action that Hollywood takes toward reality which results in a complete alteration or change in perception. This implies a significant, fundamental change away from the truth.
- A. subtly hewing to: Means slightly conforming to, which contradicts "completely altering."
- B. casually distorting: Means slightly twisting the truth. While distortion happens, "casually" and "slightly" might be too weak given the phrase "completely altering."
- C. fundamentally transmuting: "Fundamentally" means at the core; "transmuting" means changing in form, nature, or substance. This fits the idea of completely altering reality.

Choice for (i): fundamentally transmuting.
Part 2: Blank (ii)
- Context: The example is the movie Amadeus, where audiences walk away "knowing" that Salieri murdered Mozart. The author then notes: "That such a story is at best a (ii) _______ is, to them, not even a (iii) ________ ."
- Logic: The story is presented as a fabrication that the public accepts as truth. The blank needs a word for a false or unfounded story/rumor.
- D. sensation: A widely publicized event or issue (too neutral; doesn't emphasize falsity).
- E. contrivance: An elaborate or artificial arrangement (closer, but often refers to plotting).
- F. canard: An unfounded rumor or false, misleading story. (Perfectly describes the story that Salieri murdered Mozart, which the audience accepts as fact.)

Choice for (ii): canard.

Part 3: Blank (iii)
- Context: The audience accepts the false story (the canard) as truth. Therefore, the fact that the story is actually false is not even a (iii) $\_\_\_\_$ for them.
- Logic: The audience does not consider the falsity of the story at all. The blank needs a term that suggests "consideration" or "possibility."
- G. fabricated deception: This describes the story itself (the canard), not what the audience fails to consider.
- H. implausible matter: This means an unlikely topic. If it were an implausible matter, they would consider it unlikely, but the passage suggests they don't even think about its truthfulness.
- I. remote possibility: If the truthfulness is not even a remote possibility, the audience completely accepts the story as fact without questioning its reality.

Choice for (iii): remote possibility.