I have noticed toddlers and children born in game (regardless of species) won't look like their parents, but WILL look like them when they hit their teens and young adult age.
Examples: I had a vampire couple one with black hair and one with blue hair give birth to a BLONDE haired daughter. Said daughter's hair turned blue once she reached her teen birthday.
Had 1 male alien (black hair on his disguise) and one human (blonde hair, Candy Behr was mom in this instance) and they had a RED haired daughter during toddler and childhood and then once she hit teen her hair went black like her dads. I know in the case of aliens its a DISGUISE however I read somewhere the disguise genetics are supposed to pass down to the children by default and the kids can just choose to change their disguise however they want when they come of age.
1 male (black hair) merman and 1 female (blonde) mermaid had a son together. His toddler and childhood he had GREEN hair. His hair changed to blonde once he hit his teens.
All of these cases the toddlers and children NONE of their faces looked like their parents until they reached teenhood. Everyone had the default random townie faces and features. This was happening both with and without mods, In my case in terms of mods I have MCCC set to combine traits and body type to mix parents in the custom genetics and yet this still happened. Without the custom genetics settings on a clean game everything is random but the kids still don't look like their parents until they hit their teens.
So its not just mermaids that are affected. At least that's how its been in my games. 🤔