I am writing up a one shot for some friends, but it has been years since I played. I vaguely remember an interesting concept I read about a Scorpion town where actors trained. Everyone in the town was an actor, and the whole town ran off a script or improvisation when visitors came by. The cast would change every year, leaving travelers confused to say the lease.

Now looking back, I can't remember which book talked about this town and Google search is failing me. Anyone have a clue about this and where I could read about it again?

I believe you're thinking of Painted City https://l5r.fandom.com/wiki/Painted_City

yes, painted city! I listened to a game being run there once, at a table behind me in a games store while I was playing a small Magic tourney. The DM had the residents basically playing a Rokugani version of Shakespeare, the tempest, I believe. They had several citizens of the city "run into" the party while traveling to the city, and all were stranded there by a strange storm that blew up around the city, keeping anyone from leaving, while they wove the tale of love and betrayal, the party not knowing that everyone else was actors, including the "non scorpion" they had met on the road.