Personally I think the biggest problem is the rewrite FFG did to the Declare Target step in the TFA Rules Reference, specifically the last bullet point of page 4. They've effectively nerfed or broken more than one ability with that rewrite.

I think the target should become the "defender" before the costs are paid and that is the moment it's "declared" as the "defender", but only if the attack is valid (in range and arc) for the weapon chosen. And if you can't carry through with the attack because of a blocking ability of some sort, then none of those steps happened, much the same as an action that can't be taken, didn't happen. But that's just my opinion based on my own hinky logic.

Your rambling attempt at resolution is pretty spot on.

The real question is : When exactly does Rebel Captive trigger?

1. “Declare Target” step

i. Measure range to enemy ships and check

attacker's firing arc

ii. Attacker chooses weapon

iii. Declare target of the attack

A) Receive stress from Rebel Captive?

iv. Pay cost to perform the attack (if applicable)

v. Target of the attack becomes the defender

B) Receive stress from Rebel Captive?

The new FAQ came out today and 1iii is noted for the trigger of Rebel Captive - so the correct answer is "A."

Hobbie can remove the stress token after he spends a TL.

Glad to see this settled. And happy that it is after step 1.iii, it's the more intuitive place to trigger it.

Even if it screws up Latts Razzi, in a rules-lawyery kind of way. (-;