Kayaba's learning about the ability to trigger circuit development where seemingly none are present wasn't a fluke of his research. The author has discussed in some threads the idea that the Association and other magi, predicting a future period of extremely reduced mana supply, worked together to bury this knowledge centuries ago. However secrets like that take time to die so it's possible Zouken Matou either lived before or during the period when the knowledge was being suppressed. When he started training Kayaba, Zouken revealed this to him as the starting point for his failed plan to make Shinji a suitable heir.
It's glossed over, but when Rin contacts Ilya, it's revealed that the outside world has no idea who is behind trapping the players, in addition to not knowing people on the inside think they're dying. This gives Kayaba so many more options than canon.
As he's not being blamed, his reputation is still intact. Argo wonders why he gave up being the next Bill Gates for his death game—he didn't. He might even be supposedly leading the charge on trying to free the players, earning him even more good will in the process. Even the fact that the players know he's the one who trapped them isn't an insurmountable obstacle, because he just appeared to them as a faceless NPC. He can easily frame someone else, maybe even use mind-control magic to force them to confess. And if he does get found out in the end, he can still flee.
Not killing the players means the outside world isn't panicking, and there's no real rush to get them out. From their perspective, the players are basically just in medical comas. Depending on what information he released, they might even know there's a Win to Exit condition, which means they'll all escape on their own anyway and there's really no need to worry about it.
It was already unlikely that anyone in the Moonlit World would realize magecraft was involved here, but this reduces the chances even further. Given that the Clocktower has no reason to look closer at the players (especially since it's taking place in Japan, which is considered a magical backwater), they have no reason to notice anything suspicious. If the Enforcers found out what's going on before Game Clear they might kill everyone in their sleep, but as-is the players will at least be able to make it to the end safely.
In canon, Kayaba's entire plan arguably failed when Diabel died. Without a strong leader, the Front Line was disorganized, one of the biggest guilds in the game gave up after a disastrous boss battle, and eventually Kayaba had to enter the game himself as a GMPC to get everyone back into line. Here, he has no need to get involved so directly, because Diabel is doing more than he could ever ask for. This is why he enters the game pretending to be an NPC and takes on an apprentice, instead of doing anything more direct.
Fridge Horror:
It really can't be overemphasized how terrible the "use uncooperative dead players for direct soul experimentation" thing is. This is actual, literal torture, and by all indications helping Ilya is just a minor side benefit, not the main point.
Diabel sees that the King Slime has a person-shaped magic circuit. When Yui is putting a player in the demon shell, Cardinal notes that this will do further damage, but it is "within acceptable parameters." Exactly how much damage is being done to these souls that are getting shoved into monsters?
