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1. Do the Chosen haver to include the Avatar whose zone of control (ZoC) overlaps the scouts at 5cm?
No. You're never forced to intermingle the defender if you don't want to.
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2. Can the Chosen run around the Avatar's ZoC to reach the scouts and not include him?
They actually don't have to avoid the ZoC, as long as they aren't contacting the Avatar. Once you're in the target's ZoC, moving to base contact with the target takes precedence over the other movement restrictions.
Related FAQ (emphasis added):
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Q: It’s possible to place a Scout unit just behind another friendly unit, so that the Scouts 10cm ZOC covers the friendly unit too. If this happens, can I charge the non-Scout unit? The rules say I can’t enter a ZOC unless I’m charging the unit it belongs to.
A: You are, of course, allowed to charge the unit! If an explanation is needed, then let’s say that the rule for moving into base contact with the enemy takes precedence over the rule for not entering another unit’s ZOC. However, any player who has attempted to use this tactic to stop a charge should hang their head in shame!
On a different note, the Chosen would need to be in formation after their charge moves. Since they are already in the ZoC, they must move directly toward the target. That might make staying in formation impossible, depending on how far apart the scouts are. That could mean you have to lose units or declare the Avatar intermingled to make it work or take a different action. No one can say for sure without seeing the exactly layout of the models.
Obviously, if not directly involved the Avatar would still be in support range and would get those attacks.
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Reading the rule on intermingling it states that the 2 formation become one. When you enter a ZOC you must head for the closest unit (the avatar).
This is not quite correct. When you enter a ZoC, you must head for the unit whose ZoC you entered, not the closest unit. Obviously, unless you have mixed ZoCs that will be the closest unit, but in a case like this it can be a different model.