I sort of see your point now.

My guess would be that some people would shrug and go on about their (recreated) life, some would grumble a bit first, a tiny minority would be so traumatized by the thought, that they would be unable to live and maybe even suicide, but on the whole, if the new life is not vastly different from the old one, it would be a non-event.

I agree with the point b), more or less. Note that the AI (let's call it by its old name, God, shall we?) also has an option of not revealing what happened to the humans would be detrimental to their happiness.