Eh, I think the idea might be fine, but I think you are stretching the similarities a bit much. The whole Npc idea is fancy, but doesn't quite fit in with the idea and direction of Valheim all that much... while Npcs would be interesting to have, they are not what defines Valheim as the game we know. The worlds of Valheim is based on the mythology and lore of the Vikings, and stretched beyond that with the concept of a tenth world, which is what we inhabit in game. We are the fallen warriors of Midgard, ie our earthly world, from which the Allfather Odin has recalled us to rise again once more, our previous lives naught but a dream or echo.

That said, I would love to see an actual NPC mod or game of our previous lives, a la an actual medieval survival raiding sim; say, the Vikings vs the Saxons, without all the mythological realm elements...

As far as the Japanese go, I think a Japanese version of mythology, possibly Shinto and kami based, would be better suited to a Valheim game world. It would sort of give me old vibes of the Rome total war Blue Lotus mod, where the legendary oriental civs and dynasty fought against their demon realms.

An actual Japanese medieval game with npc clans or whatnot I think would be too much of a different game, other than in styling.