Since I'm not sure how the challenge was meant to handle my concerns above, I went ahead and tweaked the generation 1 goals and rules. Dad got all three of his women pregnant. They all did end up having girls and we held a poll and determined the "heir".
The heir and her mother moved into the house that my founder built (worth over 100,000) and while the heir was a toddler, Dad and Mom lived "together" (while he was still seeing the other two mothers and about 4 other females, too. He likes to get around).
As a child, Dad moved asked Mom to just be friends, and he moved to his studio apartment above his retail store and he went back to romancing his women.
Waiting on the heir to age to teen so she can move out, though I will be switching back to her and Mom and having Mom find a new love and get married (that way it'll play in with Generation 2's story).