If you go ahead with moddable humans, might I suggest the following:
A new building in town, the 'Petting Zoo'
The Petting Zoo is essentially a Monster Brothel, a place for the Breeder to rent out his monsters to local townsfolk for extra income.
When the player accesses the Petting Zoo, they're presented with three rows of three client cards. Each card depicts the client's randomly generated human appearance, and what type of monster they're looking to spend time with.
The first row are the Bronze Clients, bronze clients look for either a specific breed and a vague appearance trait 'A dark-skinned catgirl' or a specific appearance trait and a gender 'A male monster with red skin/fur'
Second row are Silver Clients, Silver clients either ask for a specific breed and appearance trait 'A Harpy with Green Feathers' or they ask for a specific trait along with bronze level standards 'A light-colored Dickwolf with All Night Long'
The last row are Gold Clients who, of course, ask for all three 'A brown-furred Holstaurus with Geyser'
If the player has a monster that matches with a client's needs, the player selects the card and the matching monster. The player is shown an animation of the client having sex with the mosnter, and is paid based on the monster's stats and the client's difficulty. Also note this will cost one of the monster's breeding attempts for that day.
A note about traits: The traits these clients request should be limited to ones that affect the sexual experience with said monster. Traits like greased lightning, geyser, cruel, gentle, all night long, etc.
A note about clients: I recommend instead of randomly generating clients each time the player visits, have a pool of clients that are generated at the beginning of the game, and the Petting Zoo cycles them in and out daily, filtering out clients the player hasn't unlocked the requirements for yet. That way a player can work toward building a stable of monsters to consistently meet their demands.
Optional: Add a Petting Zoo ranch upgrade, allowing the player to access the Petting Zoo interface from their ranch, saving a trip to town each day.
II. Since you mentioned factions, and it looks like player pregnancy is up next in features. A faction suggesstion, along with a built in plotline:
Spoiler (click to show/hide):
Cult of the Divine Seed.
This cult believes that monsters should be free to mix and breed with humans. This of course is in opposition to the church, so they are in hiding, plotting an uprising.
Meeting the Cult: Once the player has gotten pregnant once via their monsters, and Deliah's demands have reached an arbitrary threshold, a new set of clients are unlocked for the petting zoo (see above) these clients specifically ask for traits relating to breeding, such as mutagenic, are you sure you're not adopted, etc.
Fulfilling their needs gets you introduced to the faction. The faction offers quests, such as breed a monster with a particular set of traits, or make a shipment of Holstaurus milk for one of their members. After getting a high enough rep with the cult, you're given a choice. Turn the cult into the church, which will lead to them forgiving your debt, or aid the cult in overthrowing the church.
III. Random idea for gold level trait:
Likes to Swallow. Breeding with this monster takes 10 minutes longer, but if the monster has an available feed for that day, they benefit as if they harvested and ate a consumable from the monster they bred with.