Sacred Haven of Debauchery

Well, personally, I'd be fine with a version where everyone is aesthetic, beautiful, and as if they just stepped off a magazine cover.

And yes, I'm exactly one of those who'd be fine with the last option — chainmail panties for everyone without exception.

I was honestly a bit taken aback that you called the generic lady ugly. She's, well, the most ordinary. There's nothing wrong with characters who don't look like fashion models. 95% of Earth's population looks like that, and they manage just fine.

In general, I think there should be variety. If everyone is a stunningly handsome hunk in chainmail rags, it'll get old fast. We need all kinds of folks — pretty ones, generic ones, and sketchy ones. Then, first of all, you can appreciate characters not for a cute face but for an interesting story, and secondly, against the contrast of ordinary people, the hot hunks and beauties will stand out better.
Although I'm a terrible person — I play Bethesda games with slightly file-polished vanilla NPCs rather than fully overhauled ones; in Fallout 4, the vanilla appearance suits me completely. But Fallout 4 is good precisely because, for once, Bethesda made incredibly charismatic companions (Nicky ❤).

I didn't say that properly dressed characters aren't needed. In Jackson's Lord of the Rings, no one is flashing tits and asses, yet in my understanding, that trilogy is beautiful in every way.

As for Catherine, it's just that the character's image has been shaped over the years — even Ubisoft themselves drew her cute for some online Heroes wank-fest. And here she's not a freak, but she just doesn't look like the familiar Katya. It's like drawing Roland or Archibald Ironfist without their little mustaches. Something's just off.