I agree with what others said that more customization is generally good, but not all games really need that level of customization. For something like animal crossing, I think the body type thing is fine, since the designs are more neutral unlike what you're describing. I think what could help is a third option that's a more neutral body type. Or maybe if it's not relevant, just don't have a body type option.
I also don't know much about runescape, but I assume this was an update that just changed the names from genders to body types, so adding other options might have increased the scope of the update. I think at least uncoupling that from gender is at least an improvement over before. Plus, I kinda disagree that people would only pick the corresponding pronouns. Plenty of people have a gender expression that doesn't necessarily match their gender identity.
Man I wish. Those puzzles are ingrained in my skull forever.