Most of your logic runs on the assumption that Auri genetics function just like human (or Hyuran) gentics, and that they're controlled through and expressed by similar processes... which is just that, an assumption. We don't know how Auri genetics work, and really, I doubt they've put that much thought into it.
However, for all we know the genes determining height and muscle growth / density are on the Auri sex chromosomes... which would easily justify the sexual dimorphism Au Ra exhibit. While it's rather jarring to be sure, and uncommon among mammals, there are more bizarre cases of sexual dimorphism in nature.
Any case of sexual dimorphism can be explained by genetics. It's a cop-out, but it's there.
Anyway.
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Size and power are not the sole determining factors in a fight, that's all I'm trying to get at in the hypothetical "Roegadyn MRD vs. Lalafell ROG" fight we have going on. I know you want to think they are, but they're not.
Yes, realism only applies when the author wants it to, and Trunks lost because Toriyama wanted him to. The point is, generally speaking greater size = greater power = requires more stamina = faster tiring. In fiction.
You can't use Broly as an example either, he's not canon.
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1. Othard's western steppe can support life (considering the Xaela live there), but we don't know anything else. Is it mountainous? A desert? Snowy? Are there large game animals? How warm is it in the summer? How cold is it in the winter? Can they grow food? What's the vegetation like?
We don't know, and the thing is that it doesn't have to run on real-world logic because it's not a real place. For all we know it's a cold desert with five-ton mammoths that have super-efficient metabolic systems, who live off buried grass. They are numerous, plentiful, docile, and maybe domesticated, so there's no shortage of food among the Xaela, and they fight other tribes just for the hell of it.
It doesn't make too much sense, but neither does regularly fighting 2-story tall rock monsters with a pair of daggers.
2. See my above point on genetics.
3. That post was made probably before the Au Ra were conceived, so while I'm not discounting the possibility of interbreeding between Au Ra and Doman Hyur there's also the possibility they're too genetically different for it to be viable. Even if it's possible, in nature genetic hybrids are inherently infertile or become infertile by the second generation, so it's highly improbable that Hyuran genes have gotten into the Raen gene pool and altered their physiology.
4. I'm not saying you're wrong to disagree with the direction SE chose to took the female Au Ra (or Au Ra racial design in general), but only time will tell if it's a mistake.
5. It's just an assumption, but even if they put up an official poll somewhere, unless they forced everybody to fill out a survey asking what they'd like the next race to be like it wouldn't be representative of the general consensus. (Plus a large amount of this game's audience as well as it's developers are Japanese, and they do tend to favor the moeblob image.) Even if they did that, chances are people would lie, put in smartass answers, and / or just be apathetic towards it in the first place. Ever heard of the "Dub the Dew" contest?
Most people don't put a lot of thought into their race anyway. It's almost purely cosmetic, so people go with the "mundane," "elegant," "cute," "sexy," or "tough" race (Hyur, Elezen, Lalafell, Miqo'te, or Roegadyn) and don't put much more thought into it. Complex reasoning such as yours and mine ("I want an attractive, but still tough woman who looks like she'd actually be out adventuring.") is far from the norm.
Never said you had to use a Fantasia to change to a female Highlander or Roegadyn. Yep, doing that would just pour more money into SE's coffers... so do things the hard way. Never said doing the right thing was easy.
I'm not going to say "Au Ra are bunk" because, like most things, there are things I like about them and things I don't. They're very cool, a much more fantastic race than any of the ones thus introduced, and are rather customizable (the men moreso than the women actually, if you bother to look at certain options). On the other hand, there's the excessive sexual dimorphism that makes the women tiny waifs while the men are tall hunks... but you gotta take the bad with the good. Can't have everything. Can't eat your cake and have it too. Etc.
To answer the question:
If that happens, then I'll be a bit upset; we already have enough inherently waifish / moé female designs. Until such a time, I will simply consider the sexual dimorphism present in the Au Ra part of their racial identity. The intentionally moé design of the females there is no excuse for, but... it's a game I'm not in control of, so sig.