Step 1: Recall the characteristics of Rayleigh flow.
Rayleigh flow is the flow through a constant-area duct with
\[
\boxed{\text{heat transfer but no friction}.}
\]
Step 2: Determine the effect of heat addition.
Although heat is added to the fluid,
\[
\boxed{
\text{the process is irreversible,}
}
\]
which causes an increase in entropy.
As a result, the stagnation pressure decreases.
Therefore,
\[
\boxed{\text{Stagnation pressure decreases due to irreversibility}.}
\]
Hence,
\[
\boxed{(C)}
\]
is the correct answer.