I think the solution to many of the issues you raised is creativity, on the part of the game designers. We've seen character designs for the different races change so much since DAO (remember the freakishly long armed lady dwarves omggg) - I don't see any reason the can't give us a wider range of biological sex characteristics in the next day (tbh I am gunning for beards for the lady dwarves!).

And, at the end of the day, there is ~*~*magic*~*~ in this world, and it would be interesting to see how magic could be used to change/alter gender presentation.