Right. When I suggested the idea with the fire2 button, I had completely forgotten, that "Gravity Snake", unlike 99% of all other C64 games, doesn't actually need the standard firebutton in the gameplay (okay, for restarting the level, but not for controlling the snake itself). This means, fire1 is not really needed so far.
Then, logically, you wouldn't need a fire2 button support at all and of course, fire1 can be used for the rewinding process. In this case, I would set it similar, to what "Vivid Warthog" also had suggested, that the game rewinds, as long as the player holds down the fire1 button. If the player release this button, he can start playing again, from this point on. That would be a pretty intuitive approach, if you ask me. The rewinding could begin, after the player had hold the fire1 button for 2 seconds.
And the "level restart" function could be mapped to a short single button-press. A short press on the firebutton, normally is alot shorter than 2 seconds and as a side-effect, this would have another advantage. Alot joysticks have a autofire-button and then also this autofire-button could be used for level-restart, because autofire is alot of short button presses in a row.
Additionally I would also use the Space-Bar key for level-restart, because in alot emulators today, the user can remap a keyboard-key to a controller-button and then these users can do this with the Space-Bar and they would have the level-restart on another button on their controller, than the rewinding-function, which would also be nice. Then you don't need to take care, how long you press this button.
And some controller-adapters for the real C64 machine, like for example the GenAssister, plug into both joystick-ports simultaneously and with such an adapter, the player has the fire-function of the first joyport directly on a controller button too, and this fire action corresponds to the Space-Bar in most games. Therefore this adapter is great for Shooters on the C64, because in these games, often the Space-Bar is used for "calling a drone" and "send away a drone" and then you have this feature directly on a button of your controller too, besides the normal fire function on another button. And when "Gravity Snake" uses the Space-Bar too, then this also applies to your game.