After wrestling with your conscience, sense of pragmatism, and the by-now ingrained habit of not telling adults about supernatural stuff, you decide to tell Lu-sensei the truth.
"The short answer is that I'm the reincarnation of a sorcerer from another dimension, I see bits of my past life when I dream, which is where I learned a lot of the magic I know, and I met someone else from that dimension who was able to give me extra pointers."
The old man blinks. "I see," he muses, taking a mouthful of omelette. "Dare I ask what the long answer is?"
As it turns out, about two hours' worth of discussion.
Lu-sensei doesn't have any problem with the concept of you being a reincarnation, even of - as you put it - "an evil sorcerer who created an army of monsters to overthrow a kingdom, and sort of turned into a giant pig-demon thing at the end," but he does seem rather disbelieving of the notion that you've been able to remember your past life since birth. As he tells you, there are entire orders of mystics who spend their generally very long lives training towards just such a goal, often with less success than you claim to have stumbled into largely by chance. The part about your past life being from another dimension also requires some explanation, since as far as Lu-sensei was aware, there weren't any humans - or beings close enough to human to have compatible souls and reincarnation processes - native to other realities. Individual humans taken by otherworldly creatures as supplicants, slaves, sacrifices, and the odd consort, certainly, but entire kingdoms' worth of humans, living by their own laws without oversight from at least one demonic overlord? That, as far as Lu-sensei knows, is supposed to be impossible.
You think of Ganondorf's "Demon King of Evil" title, and quickly change the subject.
Introducing Briar goes over better. Sensei has suspected for a while now that you have some kind of guardian spirit hanging around you. He wasn't sure what kind of spirit it was, thanks to the twisted energies in Sunnydale confusing everything; prior to leaving on this trip, he was betting on an ancestral spirit or a minor demon. Briar's demonstrated ability to eat a small piece of your omelette puts paid to the former theory, and after Sensei does something with his aura that makes his eyes glow, he admits that Briar's aura is definitely not that of a demon. He calls her a "yousei," and appears rather surprised that she's your teacher in magic. Evidently, the fairies Lu-sensei has heard of are... not overly bright, to put it charitably. Briar seems put out about that, but has to admit that most fairies really aren't much more than hyperactive fireflies when they're young, and some never grow out of that phase.
On a side note, even when his eyes are glowing with ki, Lu-sensei still can't see Briar the way you do, just her aura. This leads into a discussion about magic, wherein the old man freely admits that he has no talent for sorcery, nor any interest in trying to learn.
"Our rude visitor from before is far from the first spellcaster I've had to be firm with," your teacher says grimly, while sipping at his coffee. "I've met dozens of his ilk over the years, on both sides of the Pacific and in other parts of the world besides, all of them convinced that they were gods among mortals, as if the ability to tap into forces for which they have neither understanding nor respect somehow excused a complete lack of manners or basic human decency."
"I would like to take this opportunity to point out that I am no more rude than the average California boy, sensei."
The old man snorts into his coffee. "True enough. You also didn't resort to throwing our ill-mannered visitor over the balcony until he pulled out something rather more destructive than a hand grenade." He raises his mug to you. "Thank you for that, by the way, Alexander. The days when I can casually shrug off explosions to the face are a long, long way behind me - and while I suspect I could have survived this experience, there was not much I could have done to protect you, your tiny friend, or Miss Chase."
You pause and look back at Cordelia's room. "Is she still-?"
"Sleeping soundly," Lu-sensei replies wryly. "I really must think of some way to improve that girl's situational awareness. Normally, I'd just walk in and yell in her ear or dump a glass of cold water on her face, but it's dreadfully improper for an old man to be in a young girl's room like that."
"And she'd make your life hell for it, too."
Lu-sensei nods. "Thus, I am wise twice over for not doing so. Speaking of sleep," he says then, "you should try to squeeze in a few more hours before our flight. The tournament starts tomorrow morning, and every bit of ki you spend warding off fatigue is one less you'll have to face your opponents."
You nod. Between the evening's excitement, the meal in your belly, and the emotional fatigue of having come clean with your teacher, you're definitely tired enough to go back to sleep. You take your plate to the kitchen and then head for your room, but you pause at the doorway and look back at Lu-sensei.
"Are we good, sir? I mean, with the whole magical reincarnation, evil sorcerers knocking on the door after midnight thing?"
"That depends," Lu-sensei replies. "I didn't get much out of our unwelcome guest before he resorted to fireballs and hell-bats, but he seemed to believe that someone here had - how did he put it? 'Desecrated a holy place and murdered its appointed keeper.'" He raises a bushy eyebrow at you.
"There's a naturally-occuring summoning circle down on the beach," you answer, meeting your sensei's inquisitive look with the most serious expression you can muster. "It's rare and valuable to the right kind of magic-user, but it's no more 'holy' than any other piece of unspoiled nature. As for the 'keeper,' somebody summoned an electrified squid big and nasty enough to make a meal out of most humans, then left it in a place where anybody curious enough to walk through a grove of trees or down a strand of beach could have wandered in. There were no wards to keep people out, or to keep the squid in."
"I see. You could not have run from this creature?"
"I could have," you admit. "But it attacked me without warning, it was threatening Briar, and it wasn't something that should have been in this world to begin with. I'm not going to lose any sleep over turning it into calamari."
"No, I expect not." Lu-sensei mulls it over, then shrugs. "Well, I suspect we shall need to be prepared to speak with our rude friend in the loud skirt when we pass through here on our way back from Japan, but on the whole - yes, Alexander, I believe we are, as you say, 'good.' You know, as long as you don't summon an army of monsters, turn into a giant pig-demon thing, and try to take over the world or something silly like that."
"...thanks, Sensei."
"Bah! Don't get all mushy on me, boy. Now that I know you have magic as well as ki and martial arts on your side, I will be expecting more from you in this tournament, to say nothing of our lessons when we get back to Sunnydale. I certainly won't accept 'jet lag' as an excuse for bad performance over the next few days!" He waves one hand dismissively. "Off with you, now."
You bow, then leave the room.
The rest of your time in Hawaii passes without incident. Neither you nor Lu-sensei mention your overnight adventure, whether in Cordelia's hearing or out of it, and she seems to have overlooked the small burn marks scattered around the front room. The flight to Japan is equally unremarkable, and you arrive in good order, apart from a certain soreness for sitting on your butt for several hours.
Thanks to the Chase family fortune and Cordelia's uncompromising standards, you find yourself checking into a seriously upscale hotel, where - conveniently enough - the staff all speak English. Registration and preliminaries for the tournament begin tomorrow morning, and Lu-sensei expects you and Cordelia to be up and ready to go by seven o'clock local time, no later. This still leaves you with several hours of free time.
