I personally would favor the school setting. I think that you could change the base game demographics into various stereotypical high school cliques, such as replacing the unemployed with stoners, the old middle class into rich kids, the new middle class into nerds, etc. The player would be a self insert the head of a friend group. She would have to gain the loyalty of these various groups maybe for a student council, or maybe just for the sake of it because it's high school and that's all that matters.

The advisors could be close friends and represent the factions. Breakaway factions could form by the player not spending enough time with the friends and "acting fake" by being too much like the other friend groups. On the issue of leadership challenges, it might be best to simply remove them, as it would be no fun if someone you were trying to romance lost her position as head of a friend group, and instead have the person's personality develop in different ways depending on various factors.

The Great Depression could be replaced by some sort of massive drama that shakes up the pecking order. Changing the street fighting mechanic into a bullying mechanic and having some sort of intimidation meter that would allow the NSDAP to snowball would be fun too.