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I've been looking for this book for about a decade now. This is my favorite science fiction book that specifically tackles the issues of trans-humanist society as it relates to perceptual paradigms and influenced my sense of creativity to the current day and spurred my interest in perceptual philosophy (which I have based my career on).
Here are the details:
Age of Book
I believe I was in a Barnes & Noble near Davis, CA at the time which would put the year between 2002-2008 (I lost the book in the move). I believed it was a recent publication from a little known author when I picked it up, but I don't remember how that parsed that out (I vaguely remember a Wikipedia article saying something about this author and the year 2002? Could be a false memory).
It seemed to me that this book was or should have been the second book in a series, or at least in a series, but I do not recall that definitively.
Space Stations: At first the setting seems to be a taboo subject, an open but almost lost secret, but upon leaving their culture our band of heroes is confronted by the cold reality of their automated home as they make their way to Earth's moon from... I want to say Titan, but that might just be Eclipse Phase talking. These Space Stations are massive and (if I recall correctly) alien. This is a big moment in the story because it shatters their world, this an entirely new method of travel for them and an entirely new way of seeing their home, a home where travel meant changing your beliefs intentionally.
A Wooden Spaceship: In order to build a spaceship while safe within their own dimension of the augmented reality setting, a non-industrial space ship is developed using wood and lacquer with a plan to travel through space using a series of slingshot trajectories.
Omnipresent reality bending Augmented Reality: prevalent in the first and second acts of the story, with minor differences, but almost everybody lives in some sort of construct (those who don't are considered a problem in the second part). In the first part of the book this requires citizens to share a perceptual framework with the culture-influenced world you are visiting. A second, similar augmented reality is showcased in the second act that, in a malignant but well meaning fashion, herds humans into be docile and entertained members of society by way of predictive manipulation and artificially intelligent political representation that removes all real agency from its constituents. This is what sparked my interest in perceptual philosophy, which I have since sunk a great deal of time into, as the author surely did in writing this novel; much of the novel is dedicated to exploring the limitations of perceptual frameworks.
Muse: a sort of helpful AI that becomes a low-key figure in the plot; it is suggested that the main character eventually becomes a sort of Muse herself. The dialogue between the main character and her muse, in the first act, made the muse seem a little alien foreshadowing the artificial political representatives seen later in the novel.
God Drive: This is a single use device, the design of which is of questionable origin and intent, that is purported to transform the one who triggers it into a God (this is lent credence by the God walking around). This is a post-human device that can be constructed at considerable cost, but the design is forbidden knowledge, it is the central issue of the third act story. The existential threat that this poses for humanity, the dark ramifications of such a device, was almost Cthulhu-esque in its portrayal in the novel.
Since the primary cast are young deviants (teenagers or young adults, I'm think 17 and 23), this may have been a young adult novel but I don't think it was billed that way to me.
The main character is a young woman (I think 17) who is precocious and hoping to do something new with their meta-society, she is starting to think of their meta-society in ways that are implied to be new and uncomfortable for the older members, and when the space station is invaded she is the most proactive. Despite this, she is largely oblivious to the true nature of everyone's existence on the space station as everyone else is, he insights primarily related to cultural implications in general.
The young woman has a friend from a different paradigm who warns her about... things... shortly before the invasion comes to fruition. If I remember correctly her relationship to him is actually important to the plot and pretty fleshed out but I don't remember it in detail. Suffice to say his paradigm appears more primitive and mystical, but is actually pretty advanced and intriguing by the young woman's estimation which is why she think's it's a mistake to cannibalize certain paradigms just because only a few people are left.
The other main character is a young man (I think 23) who wants to explore outside of the confines of the paradigm constructs. He and a group of friends have secretly stolen materials for a wooden spaceship. They seem to be privy to more knowledge about the true nature of their space station than others, but are still blown away by the discovery that their world exists as a speck of automated machinery.
The invaders were interesting in the last act but in the first act they were pretty generic and it was hard to figure out what they actually wanted. They were very disruptive and intimidating, that's about what I remember of them. I think I envisioned them as being somewhat reptilian and carnivorous.
Towards the close of the book a mystery man who wants to become a God gets pretty close to succeeding and that sparks of a chain of events that lead to the young woman sort-of-but-not-really saving her space station. The mystery man is talked up quite a bit in the second act for being the only person, after hundreds of years, to still be living off the grid.
The supporting cast are basically two dimensional props, they're expressively pleasant and they represent something unpleasant, this includes: parents, party-goers, political resistance fighters, political representatives, Gods, administrators, artists, and pedestrians.
The story primarily follows a self-possessed young woman as she considers what "paradigm" she would like to live in. The story starts with her visiting another paradigm that is about go extinct, if I recall correctly she is her culture's chosen Representative for how to divvy up that paradigm's holdings. This is where the author explains the importance of paradigms to the narrative structure.
The young woman then goes to a fancy party where she entertains the interests of some other people... I forget, I think she flirts but becomes very disinterested with someone, and talks a lot about her friends who are all doing various deviant things. She seems to have some kind of political aspiration... In any case, she's thinking about her future, hear's about some other paradigm maybe being invaded and goes to bed.
Then everything pops off, her paradigm is on fire, invaders from outside the station are capturing everyone and demanding their compliance... Being one the deviant minded she escapes capture and ends up with her friend and insists he hurry the heck up with that wooden spaceship.
They launch into space, it's pretty awesome, but I suspect they don't really know what they're doing or where they're going. They're pretty reliant on the automated space stations.
The end up in another space station (I think it's Earth's moon), and begging for help, but almost everyone's reaction is "wow, that's so interesting, now let's talk about me." Only one man, the one man still living off the grid, seems interested in actually helping but his promises are pretty hollow. They're introduced to a physical God as a polite formality, the physical God seems to preoccupied with whatever mystery man is doing in his garage, and also seems like he won't really help.
Our heroes, having gotten the run-around, get involved with an ultimately futile resistance that involved trying to game the system but their attempts just end up being subverted by the nature of the system that actually assisted them in their work and then patronizes them. That whole plot thread fizzles in a pretty enjoyable way.
Meanwhile, mystery man completes his God Drive (somehow, I forget if he had help or if he rejected the offered help because it was a trick and completed it himself anyways) which causes a whole upset because there hasn't been a new god for sometime and the aforementioned actual God is none too pleased. So mystery man and the gang head back to Titan where it turns out the God Drive was the MacGuffin that the villains were hoping to have the whole time. We end up in a massive multi-faction stand-off with the activation of the God Drive as the trigger, and if one faction uses it everyone dies but if another faction uses it they maybe get absorbed in to the space station... I don't remember, it gets a little wacky.
Main character uses the God Drive, everyone gets absorbed into the space station, but she's a muse who brings people to a special place where they can be free with the implication that they'll eventually rise up against the oppressive culture they live in.
What It's Not
Although the technology featured in this story is shared with predecessor works, and although I have not read these predecessor works, I do not believe this is from the Discworld series and it is not the story it shares strong elements with set on Earth
That's what I remember, although I suspect my memory is flawed here, it's possible I got this book at an even younger day.