Wow! I haven’t read “The Lottery” since junior high. Great concept.

It looks like you have considered a lot of the requirements for the game in your design doc.

-One challenge I can see is creating the narrative, 3D asset, and voice for a large number of townspeople. I think it is doable but I feel like scope creep could become an issue here.

-I think the prototype will help you discover where to limit the narrative. Limitations help us find more creative solutions and ultimately better end products.

I look forward to playing the game. This is a great concept.

Two things that might help, 

I notice your use of historical photographs as basis. You might look at Arthur Rothstein and Dorothea Lange, they took photos of people living in the dust bowl during the 30s for the FSA. The ones that aren't of the dust and devastation might work for Welkin. They've got some serious living through some stuff vibes and I would think those would fall in public domain.

Second thing. I see you don't have a lot of audio work under your belts but want to voice all of your NPCs. Consider using Audacity with your audio files. Cleaning up mic buzz (which you are going to get at different levels and are going to want at only one) is really easy in audacity. You can alter a file in very specific repeatable ways as well, in other words I would think you might be able to have someone voice multiple characters and between what they do to alter their voice and what you do to process the files differently (pitch adjust etc) you could probably end up being able to make it sound like more than one person and do it consistently.

Excellent choice of Public Domain work to start from! A "narrative adventure" sounds like a great fit for it.

I wonder about the feasibility of npc-scheduling in a first-person game (at least, I've heard various devs remark on the unexpected time demands scheduling in general, and first-person perspective seems like it tacks on additional content costs) but the scale of everything (total time, total possible activities/locations, total characters, level of detail, etc) is probably a major deciding factor. Your choice to keep the story beats to ~5 sounds good.

I'm very curious to see what you come up with for this! 

(Also: a web build would be fantastic, if it's not too much trouble!)