I am wondering if this game idea is still a thing.
By anyhow, for the love of the idea, I will share some thoughts
This game parody could work with today tools. A trained AI model on story and world building, can do a pretty good job in setting the world, overall characters and the conflicts within.
And for the visual aspect, the general vizual direction for the world and characters can be made with an AI model. An artist or good prompt usage could take it further and refine the CGs.
I saw some good taimanin AI images made on various profile websites and it looks that this apprach is more than viable.
Now for the game engine RPGM or RENPY are obvious choices. It all depends of the setting, game loop and story.
I would lean in for using RPGM, but that is just my preference.