I will happily confess (in private) that I enjoy stretching the skin of my Oubliette setting over the bones of different rules systems. I find there to be profit in such undertakings-- often, restrictions on artistic endevour end up benefiting the system. So I have sort of been looking at "races" as an opportunity to explore the "super-natural" races-- Karnies are touched by the legacy of demonism & bloodmagic of their ancestors, Woses are almost animals, in the spiritual sense of totemic animals, Ghouls are grave-reeves & walk the boundies of the quick & the dead...
I think there is a danger of putting too much weight on "races as merits," or what have you. It is interesting, I have to admit, but again, some concern must be given to the lowest common denominator. "Merit: Northman-- you are bigger & stronger" isn't far from "Merit: Black guy-- you are tall & play basketball" or "Merit: Chinaman-- you are good at making small things but beware opium." Not in our eyes, but in the eyes of potential players. Stupid players! Must be culled. Social merits, or better yet, suggested merits, (merits-- feats, powers, edges whatever) are a good way to go. I think they accurately represent the range of variance in the species, & reflect somewhat how actual breeding works. Then again-- direct counterpoint-- Klial DOESN'T work this way. Which gives you an interesting axis to work on.
I do wonder about preserving plausibility. I don't know, I am interested in the lines of suspension of disbelief. It seems that things like "Dragon People" ala the new guys in 4e are a harder pill to swallow than other things, even things that are equally crazy, like girls with bunny ears (per Final Fantasy). There are levels of almost Jungian plug-ins, you know? Which is what I'm trying to toy with. I am finding you can stretch a lot of things you wouldn't expect, but other things, people get leery of. In general, I want to provide something for players to "latch on to," something to identify with.
Which oh, I didn't mention this at the start of this, but having a section on "Identity" is a fan-fucking-tastic idea. It is a great place to put things that I've been awkwardly shoe-horning in under headings like "naming conventions." These are topics I want people to deal with, but I also confess to having a hard time actually putting them into the game. Well-- in the last campaign, Bernie's character's family was a big deal. Though I don't know how accurately I portrayed them in accordance to his wishes. Maybe things like set-pieces could again (oh trusty set-piece, newest weapon in my terrible arsenal!) work here, or hey, maybe putting the player in the chair of their family members. I don't know. Just riffing, & getting off the subject.
Again, I've mentioned this to Kingtycoon, but just to have it here: I have been sort of going (in this campaign & the last) with nationality & ethnicity overlapping, except when it doesn't. That is to say, that Blaine, or Malake, have their own ethnic make-ups, Blainesmen & Malake-people or whatever, that are generally invisible to the character. Unless you are something like a Rood person or a Karnie or a Pard, where your ethnicity suddenly doesn't jive-- you are a vegetarian Sikh or have to keep kosher, or whatever. This is because I am lazy & also importantly because I am getting away from made-up names. So that is there. Over-all, I have the continent broken down by colour-- colour, but again, not mapped onto real world skin colours, so the white people are likely to have the pronounced brow ridge present in the real world in black people, or the brown people are likely to have the noses present in semitic people. Sort of the Mister Potatoehead approach to ethnicity.
You know what? Order of the Stick. Order of the Stick has the "western" characters in a grab-bag of colours-- Roy is black, but is clearly the "same" as Hailey. They are, frankly, "American" in ethnicity. Paizo is doing something similar to this as well-- They have some collapsed multi-ethnic, cosmopolitan empire. I have to confess, I am pretty interested in that. I am thinking about how to diversify my game more; maybe it is just as simple as DOING it. I've been good at bringing in the brown/white mix of Malake I think, but why be so tame? I ought to stop, ought to have more recent migrations. I have been saying I'm going to make this next part of my game more far-reaching, more exploritory: maybe I should bring the same themes to the world at large.