Regarding moral, right now how it works is if it gets too low(-100), the character in question may get violent and then you'd either have to find a way to lower it or get rid of the character. It decreases if you pair a character with another that they hate, if you abuse the character in question(see: rape or being turned into a punching bag) or if you feed them body parts(item descriptions will state how much it adds/removes moral). I don't believe the number does anything if it gets high, at least as far as I'm aware.
Regarding relationships, when you move characters, they have this movement range that can overlap with other character ranges. That's basically the trigger for what makes characters interact with each other. Leave them long enough(or just sleep so time gets skipped) and it will either increase or decrease for either character. Usually it gets higher for both, but sometimes only one gets higher and the other gets lower. I have yet to see both get lower at the same time, but I guess it's possible? If the relationship numbers get high enough, the characters in question start sleeping with each other (currently it's normal native X native woman/loli, native woman X native woman and loli X loli). They also restore moral when they like the other character, so that's the way to get the moral number up. Also characters that hate each other can be made to like each other if they sleep with each other when they're horny(You can put them in that state with a consumable or with a ring that makes them perpetually horny).
