i think, for the dialog system, for like the generic "Lanky Man" type NPCs, like 100 different lines could make it not too repetitive, but the names characters i think would be cool if they had like a story line. but its up to you.
i agree with how you are thinking of unconscious npc interaction.
how would children work? would it be kinda like BDCC where a governing body takes them?
For Oliver, every in game day, i was able to go downstairs, to the west, and he was right outside in that sort of like apartment side area, i would do him, run out of stamina, go sleep, repeat. then i had the miraculous idea to take him to my room, so i used the swap places thing, got him to the door, ran all the way around to bring him inside, and he was gone.
i agree with the rent quest and possible dynamic quests. no thoughts there.
for the art i dont really know. i have two main ideas tho. could do similar to BDCC and have little sprites that would show what you are doing, not very detailed but still allows for the imagination to run wild. you could also do as i have seen some porn games do and have your players make art for the game characters and insert them into the game. but its up to you and im excited to see what you will do with this little project.
:3
(Incase you ask, BDCC is a mostly text, semi art furry porn game in a space prison, aka, not many consequences, which is why i like the change up with consent.)