I haven't read the whole thread so sorry in advance but here is my take.
People are paying to be entertained. Most people don't want to watch an ugly person for 5+ hours at a time when gaming. Look at HDTV for an example. Most females on every show are attractive. The men are too for the most part.
I don't want to spend my time watching a grotesque person for hours at a time and neither do most people.
Oversexualization of women in games is really just a joke. It's a form of entertainment. Did anyone complain about Magic Mike and how women were sexualizing Channing Tatum? Nope. It's entertainment and we want to see attractive people.
As for having a female protagonist, I think it's usually poorly done. First off, your player base is male so most won't be able to sympathize with a female protagonist. Two, most of the scenarios aren't really realistic or even feasible. The Dev talks about Dragons not being real so therefore women can fight dragons. That's not it at all. The point is that a woman could barely pick up a sword yet she's going to kill a dragon?
I'll use watching The Closer, for example. The lead character is female. She has crazy mood swings and has other typical female characteristics. Watching the show drove me crazy and I only finished it because I had already started (bad I know sunk cost don't remind me). I couldn't relate at all.
Tomb Raider was a similar experience. At least with Tomb Raider the game play and general story line were good. But in terms of relating towards the main character? The main character could have been male or female. The game didn't put any parts into it that "Oh ok, I'm a female." The one part of the game where it's "Omg, I'm a female and these guys are going to rape me." was hugely controversial. This is funny in that female vulnerability is all over TV and Movies (Book of Eli in which being a woman in the postapocalypse isn't fun when there are no laws, Spartacus where women are basically property, etc.).
I think including female issues, sexual issues and race issues into games usually go HORRIBLY wrong because mainstream media takes it EXTREMELY out of context. As we saw with tombraider (in which the bad guy clearly looked like he was about to rape you), mainstream media isn't ready for that type of stuff in games, and no publisher is going to take that kind of backlash.