I don't think it ever comes up outside of that one quest, which is why people go straight to that one when they need to cite that. I'm sure it varies based on location, not unlike real life. Those two from the quest mention being from some village that no one has ever heard of. Ishgard I am sure looks down on interracial relationships. Gridania too, maybe. Ul'dah and Limsa I feel would care less about it. Limsa even has a couple of hooker NPC trying to pick up customers of different races and there is even a Roegadyn male being mugged by a hyur and her friend after he presumably tried to pick them up at the bar.
As for viability of interracial children, they are possible. Rare, but possible with a high possibility of mutations, if I remember correctly.
I would honestly just urge roleplayers to stay away from it even if they decide to go with one of the combinations supported by in game appearance. 80% of the time it adds nothing to your character outside of giving them an abnormal appearance. You could achieve the same results as a normal looking character. I am not saying that everyone that roleplays a mixed race character did it for bad reasons. I am just saying that 80% of them have.
As for viability of interracial children, they are possible. Rare, but possible with a high possibility of mutations, if I remember correctly.
I would honestly just urge roleplayers to stay away from it even if they decide to go with one of the combinations supported by in game appearance. 80% of the time it adds nothing to your character outside of giving them an abnormal appearance. You could achieve the same results as a normal looking character. I am not saying that everyone that roleplays a mixed race character did it for bad reasons. I am just saying that 80% of them have.