Including castration doesn't necessarily have to be against the MC. Any female character could castrate a random K1 or K2, whether through the sister POV or the MC's. This could be used to show how sadistic the sister has grown, used as an indirect threat to the MC or could just be about being dominated/romancing a character that is ruthless.
The threat of castration is often used by women(maybe not in this game specifically but in popular media) in order to create fear/hesitation/insecurity in men, so it would also make sense that some female characters in this universe would actually be able, willing or even obligated to follow through on that threat(if not simply to put weight on the threat itself).
I don't recall every aspect of the plot but there's also clearly other rivals involved in this world that would want to see the MC fail or, knowing that his bloodline could cause problems for them or allow him to usurp their positions, might try to remove the threat by ending him or his ability to continue that bloodline.
Even if you don't like the fetish, it wouldn't really be that hard to imagine how this could or would work into the story.
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