This was a problem left over from history. To say it was the Third Hokage's doing alone would be an oversimplification.
Uchiha Fugaku explained the events of the Nine-Tails' attack to Sasuke. The true catalyst that shattered the bond between the Uchiha and Konoha was the Nine-Tails itself.
The death toll that night had been staggering, and the Sharingan pattern gleaming in the rampaging beast's eyes was a clear sign to everyone: the Uchiha clan was responsible. From that moment on, a rift formed between the Uchiha and the rest of the village.
Who among them hadn't lost family? Who didn't want revenge for their loved ones? The Uchiha became the target of that collective hatred. Every person in Konoha who had lost someone in the attack now looked upon the Uchiha with suspicion and animosity.
Under the subtle guidance of Danzo and his faction, the misunderstanding deepened until, finally—
"So, the enemy I've been hunting all this time... was Konoha?" Sasuke's mind reeled. Itachi was the killer, but Konoha was the mastermind. No wonder the other survivor, Uchiha Nagi, had looked ready to kill him the moment they met.
"Sasuke," Fugaku said with a sigh, "Uchiha Nagi has summoned the dead of our clan to take revenge on Konoha. After these Chunin Exams, nothing good will come of you staying in the village. If you can, you should use this chance to escape."
Things were different now. Before, Sasuke had been alone. Thanks to the "merit" of Itachi's actions and Sasuke's own youth, he posed no threat and was therefore safe.
But now, with the Uchiha clan reanimated and seeking vengeance, the upper echelons of Konoha—and even the lower ranks—would be consumed by rage. They would undoubtedly take out their anger on Sasuke. If he stayed, he would become nothing more than a scapegoat.
His very life could be in danger. As the former head of the clan, Fugaku knew with certainty that no good would come from his son remaining in Konoha. His only choice was to flee.
"Sasuke." Mikoto hugged her youngest son tightly. "That night... we chose to die. Itachi's pain was far greater than ours. So please, don't blame him..."
"No. I will never forgive him." Sasuke looked up, his eyes blood-red. "To sacrifice his own clan, his own parents, for some damn 'Will of Fire'? I will never, ever forgive him for that."
"Sigh..." Fugaku let out another heavy breath. "We are already dead. We can't interfere too much in the world of the living. But no matter what, you will always be my son."
He placed a hand on Sasuke's head. "Whatever you decide to do, I will be proud of you. I will support you—"
"Father..."
Before Sasuke could finish, the mental world dissolved. The coffins holding Uchiha Fugaku and Mikoto closed and vanished from sight.
"Danzo..."
"Haha, it's Danzo's Root!"
"I remember now. The night I escaped, I saw them—Root. They had the Uchiha compound completely surrounded. They were the ones who silenced me."
A three-tomoe Uchiha, his face contorted with hatred, glared at Danzo. On the night of the massacre, it would have been impossible for Obito and Itachi to kill over a thousand people in an instant. Even pigs would know to run, and a thousand scattered pigs wouldn't be so easy to slaughter, let alone people.
He had managed to escape the Uchiha compound only to find Danzo and his men blocking the exit. He died there, surrounded by a legion of ninja. Now, reanimated, his hatred for the Third Hokage was palpable, but his rage towards Danzo was a towering inferno.
"Hahaha, Danzo! Are those Sharingan on your arm treating you well?" the man snarled, leading the charge.
"Hmph. A bunch of dead men," Danzo sneered, unleashing a Wind Style jutsu. "Vacuum Sphere!"
The attack struck his target, killing him instantly. But it was useless. The reanimated body began to regenerate immediately.
"Danzo, I have a special gift for you," Uchiha Nagi said with a laugh. With a clap of his hands, he summoned Uchiha Fugaku.
"Do you see, Lord Fugaku? That arm of Danzo's is made of our clan's eyes. What are you waiting for?"
Nagi pointed at Danzo's arm. "All of you, look! The Sharingan on his arm now—it's entirely possible one or two of those eyes were gouged from your own corpses. Can you stand for that?"
Dozens of red eyes, belonging to the clan of the "red-eye sickness," fixed on Danzo. The raw hatred on their faces was enough to make even him feel a chill.
"Go! What are you waiting for? Kill him! Destroy Konoha!"
A chunin with only a two-tomoe Sharingan was the first to charge, fearless of death. Of course, he couldn't die anyway.
Dozens of ninja with two and three-tomoe Sharingan, their faces masks of venomous rage, rushed at Danzo, completely disregarding their own safety.
Just how strong was Danzo?
In his youth, he was at least on par with the Third Hokage. But he had later suffered a grievous injury that crippled half his body and blinded one of his eyes. Still, his ambition to become Hokage burned fiercely, and he refused to fade into obscurity.
Becoming Hokage required many things, but strength was the most fundamental. Without Kage-level power, the title was just a dream. So, Danzo had secretly conspired with Orochimaru to conduct biological research.
With the funding and resources from Root, Orochimaru's research made a breakthrough. Using the cells of a boy named Shin as a catalyst, balanced with the Sharingan, he successfully transplanted Hashirama's cells into Danzo's body.
Now, Danzo had not only fully recovered but was even stronger than he had been in his prime.
[Wind Style: Vacuum Serial Waves]
Danzo unleashed a barrage of vacuum waves, each one incredibly sharp. An Uchiha jonin's Earth Style wall was no match for it; a single wave pierced through the defense and the man's body, killing him instantly.
In one move, dozens of Uchiha were wiped out. But without a sealing team present, it was a futile effort. Each one was already regenerating.
"Danzo," Uchiha Fugaku finally spoke, his face grim. "Where have you hidden my eyes?"
With Itachi absent, Fugaku had no way of knowing if Danzo had taken his eyes after his death. But seeing the dense collection of Sharingan on the man's arm now, he could no longer contain his fury.
[Susanoo]
He went straight for his ultimate move. Uchiha Fugaku activated his Gundam, then imbued it with Kagutsuchi, cloaking the entire Susanoo in black flames.
With the Susanoo unleashed, escape was nearly impossible for Danzo. The Mangekyo Sharingan's predictive power was flawless. The giant Gundam swung its sword of vengeful flames, striking Danzo with perfect accuracy.
But thanks to Izanagi, Danzo's dead body vanished once more.
As the battle here escalated, the fighting in the rest of Konoha was winding down. With its forces fully mobilized, Konoha had pushed back the Sand and Sound ninja. Even with Orochimaru's "Serpent's Blood" enhancement, the Sound invaders couldn't hold out. Any single ninja was met with a ten-to-one assault. Even an immortal body was useless, like an Upper Moon demon facing ten Hashira at once.
As the invasion subsided, the two village advisors noticed that Danzo's Root base seemed to be under attack. They dispatched some of the ninja clans to provide support. When a contingent of ninja arrived, this is the scene they witnessed.
"Danzo's arm... Shikaku, do you see that?" Akimichi Choza pointed towards Danzo's left arm, his expression grave.
"Yes, I see it. They're all Uchiha Sharingan..." Nara Shikaku nodded, a look of contempt on his face.
Stealing another clan's kekkei genkai was a major taboo. Stealing it from a clan within your own village was the gravest of sins.
Everyone knew that after the Uchiha's fall, the village leadership would collect some of their eyes for research. But that was something to be kept in the shadows.
For Danzo to graft them directly onto his own body—that was like tearing through the paper screen and exposing the ugly truth to everyone.
"We do not move," Yamanaka Inoichi said suddenly.
Akimichi Choza nodded in agreement. They didn't dare to kill Danzo themselves—he was, after all, a Konoha elder—but they certainly had the courage to stand by and do nothing.
Besides, Uchiha Fugaku's Susanoo looked terrifying. Why should they risk their lives for a man as reviled as Danzo?
If they didn't take a stand now on the issue of stealing kekkei genkai, then in the future, the Konoha elders could just as easily come for the secret techniques of their own smaller clans.
After summoning Fugaku, Uchiha Nagi had left a shadow clone behind to watch the show while his real body departed. For him, as long as he had obtained Shisui's eye, the mission was a resounding success.
There was no need to get further entangled with Konoha. His hatred was directed at Uchiha Itachi, Danzo, Sarutobi Hiruzen, and Obito. He didn't harbor that much animosity towards the civilians of Konoha.
In the end, it was a feud with Konoha's leadership. And he hadn't forgotten that there was still a super-Kage-level Nagato out there in the world. He was no match for Nagato yet; he needed to lay low for a while longer.
Now, Uchiha Nagi's biggest problem was how to use Shisui's eye. Transplant it into his own head? Impossible. His original eyes were surely the best.
And what about Obito's eye?
These two Mangekyo Sharingan were tied to two of his greatest enemies, Itachi and Obito. Without these eyes, he had no chance of defeating them. But there was no way he was going to dig out his own eyes to replace them.
"Shisui's eye... I can extract its ocular power and use it once with a Transcription Seal," Nagi thought of a less-than-ideal solution, similar to how Itachi had sealed Amaterasu in a crow and hidden it inside Naruto.
But Obito's eye was a dilemma. Obito could enter and exit the Kamui dimension at will. Using the power of Kakashi's eye in a single-shot attack would be like killing the goose that laid the golden eggs.
Wait a minute—
Uchiha Nagi looked at Shisui's eye. Suddenly, a much better idea came to him...
While Konoha was mired in chaos and war, Kimimaro had already led the group from the Swordsmith Village away. Uchiha Nagi had instructed them to flee if anything happened and not to get involved in Konoha's affairs. They had come to the Chunin Exams for training, not to die.
Aside from one swordsman who practiced a Breathing Style and had been killed after being gravely wounded by an opponent due to a moment of carelessness, no one else had been seriously injured.
"Go, this way! There are fewer people over here!"
Leading the way was Uzumaki Karin. With her radar-like ability, the Mind's Eye of the Kagura, the group successfully avoided the enraged, swarming Konoha ninja and made it outside the village.
But halfway through their escape, they suddenly came upon an intense battle.
BOOM!
The sounds of furious combat echoed through the forest.
"Uh, I didn't do it on purpose! I swear there was no one here a second ago!" Karin explained frantically. "I don't know why, but two incredibly strong enemies just appeared and started fighting here."
"Hehe, what a stroke of luck. To think there's a little one here with power similar to a Tailed Beast."
The group whipped their heads around to see a man in white robes with chalky-white skin, looking like he suffered from leukemia, hovering gleefully in the sky.
Crucially, his eyes were Byakugan, but within the white irises were concentric rings...
"He... he can fly?" Karin was stunned. Ninja who could fly were exceedingly rare, and this man wasn't using a bird or a summoning animal, but his own power.
The man swung a rod-like object, and a chakra line shot out, hooking onto Amaru's body. He began to forcefully pull the massive chakra of the Zero-Tails out of her.
"Ahhh!" Amaru screamed in agony, but her comrades had already sprung into action.
Uzumaki Karin immediately unleashed her clan's Adamantine Sealing Chains, grabbing hold of the Tailed Beast within Amaru's body. Beside her, Kimimaro drew his Nichirin Blade and leaped into the air.
"Water Breathing, Eleventh Form: Lull!"
"Wood Style: Deep Forest Emergence!"
Towering trees shot up from the ground, creating footholds for Kimimaro and allowing him to reach the white-robed man in the sky.
But whether it was the Wood Style, the sealing chains, or Kimimaro's swordsmanship, the man dodged them all.
With their clever coordination, the group finally managed to interrupt the man's technique. The half-extracted Zero-Tails snapped back into Amaru's body.
"Hmph. A few ants think they can stop me?" The white-robed man was furious that his technique had been broken. In his eyes, not even the Five Kage were worthy opponents.
[Shikotsumyaku: Ten-Finger Drilling Bullets]
Kimimaro fired off several bone bullets before rushing forward.
[Shikotsumyaku: Dance of the Larch]
Facing this unknown enemy, Kimimaro ignored his own injuries and activated his Shikotsumyaku once more.
But the white-robed man dodged with ease, as if he could predict every move.
Just as the man swung his weapon again, intending to hook out Kimimaro's chakra, a golden flash shot past.
The white-robed man's pupils shrank. He vanished and reappeared some distance away.
"Hmph. Still trying to stop me? How much longer can you remain in this spacetime? The force of rejection can't be pleasant. The more chakra you use, the stronger it gets. How much longer can you stand in my way, Namikaze Minato?"
The figure who had appeared in a golden flash was none other than Namikaze Minato, from a parallel world. Standing on the ground next to him was a clueless-looking blond boy.
"Before I go back, I will find a way to kill you," Minato said, his expression heavy. As incredible as the Flying Thunder God was, he couldn't fly...