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THE LEGEND OF OROCHI (SNK)
2000 years ago, when civilization was begining to flourish in Japan, countries were built all over the islands. Religions were formed, and among them was the Orochi cult. The Orochi cult originally used the excess power "ki" that filled the world to create miracles. Empires begin to emerge as the Orochi cult, now a clan, began to took power over the leaders, and eventually planned to rule the country (and the world).To accomplish this, the Orochi clan decided to ressurect the Orochi, the dragon that was thought to be the embodiment of the "ki". However, to do this, sacrifices were needed, and so eight maidens, known to be the Kushinada girls, were selected and brought to the Orochi altar to be slaughtered.
The Kusanagi, Hasshaku, and Yata clans, also religious clans that flourished during that time, felt evil in the actions of the Orochi, and joined forces to terminate the clan.With the special powers of the clans' artifacts, the Kusanagi sword, the Hasshaku magatama, and the Yata mirror, they selected thier stongest warriors to stop the Orochi.The Orochi clan had their own selected warriors, known as the "Orochi Hakketsu Shuu (Orochi's Mighty Aseembly of Eight)", and the war became bloody. However, the evil "ki" of the Orochi was no match for the Three Sacred Clans, and the Kusanagi slayed the Orochi, the Hasshaku neutralized their powers, and the Yata sealed the evil "ki" of the Orochi in her body.
And so the sacred battle seemed to end, but the "ki" was larger than the capacity of the Yata, and so the Orochi was awaken every 100 years, only to be sealed by the Three Sacred Clans again.The balance of the three clans was disturbed 660 years ago, with the bitter feud between the Kusanagi and the Hasshaku. The Hasshaku, who grew a lust for power, broke the Orochi seal, and made a blood pact with the Orochi in exchange for unsurpassed powers. In return, the Hasshaku blood would be forever tainted with the poison that seeped into thier blood with that of the Orochi.
The Hasshaku changed their name to Yagami since that, and is said to have controlled many of the historical leaders from the dark.The seal was broken again in 1994, with the death of one of the Yata seals (being the daughters of the Clan's headman), the Orochi was forced from its slumber again,
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and so the Kusanagi, Yagami, Yata, and Orochi were destined to meet again, and repeat the twisted history once more.
The Characters and the Legend...
Kyo Kusanagi

His name obviously refers to one of the Kusanagi Clan in this version, but in the original, is derived from the sword, which was known as the Kusanagi Sword, that killed the Orochi dragon (Other info claimed that the sword named KUSANAGI had something to do with Yamazaki, not Kyo.... go figure @_@ ). Since the sword actually killed the dragon, I beleive that that is where SNK got the idea that it would be the Kusanagi clan to "slay" the Orochi force. "Kusa" means grass, and "Nagi" means mow or slay. So, Kusanagi actually means "lawn mowing". This idea of "cutting grass" come from the original belief that dragons in Japan sprung out from the ground and born from plants.
Iori Yagami

"Yagami" literally means "eight gods", based on the characters used. There are no reference to any other persons helping the Japanese hero Susano-o (who killed the Orochi with the Kusanagi sword), so Iori's back ground story is totally made from SNK. It is interesting to see Iori guarding the Magatama, which came out of the dead Orochi's body in original mythology, since he is an Orochi half. His former name, "Hasshaku", means "Eight Cups of Wine", from the idea that the Orochi became vulnerable after drinking eight cups of wine, and thus it's powers "neutralized" to none by the drunkenness.
Chizuru Kagura

Her former name "Yata" comes from the name of the mirror that formed from the Orochi's tears when it died, crystalizing and sealing its agony for all to see. A princess named Yata appears in the original myth, but obviously didn't participate in the Orochi slaying. Chizuru's present name, "Kagura", means "Pleasure of the Gods", or "Sacred music and dance" performed to please the gods. This is probably expressed through one of Chizuru's winning poses, when she dances.
Yuki

Hopefully every should get the idea of Yuki by now, but she is one of the eight chosen sacraficial "Kushinada" maidens in KOF '97. The term "Kushinada", however, didn't refer to the sacrificed girls in the original myth, but the princess and heroine that was to be saved from the Orochi. The anime "Blue Seed" is more true to the original, since the Kushinada wasn't from multiple sources (families). Not only is Yuki's normal background is vague, her legendary background is distorted.
Magatama
Magatamas are acutally sacred beads or orbs that were used in ancient Japanese religious ceremonies as talismen. A bit like the turquoise beads of the Native Americans.
The Eight Orochi Warriors
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(Yashiro, Shermie, Chris, Goenitz, Mature, Vice, Leona, Yamazaki) Since the original myth states the Orochi to be a single dragon, the idea of eight seperate warriors is from SNK as well. In the SNK version, the eight Orochi warriors represent the eight heads the mythical dragon has, which makes sense, though. The heads, or warriors, seems to have no distinction power-wise against each other.. The Orochi dragon was the embodiment of evil, and so is the Clan in KOF. Considering the Orochi clan being originated in Japan, Shermie, Chris, Goenitz, Mature, Vice, and Leona must have Japanese blood somewhere down their lineage. This also means Iori is related to one of these people....