FlatAssembler, the graphic version is fine for the game. I don't have much to add beyond what I've already written. This might be fun for an intro lesson on historical linguistics or the comparative method. But in that case, maybe real examples rather than artificial ones (the field seems to be moving away from constructed/idealized data in favor of real data when possible).

The other venue for something like this-- beyond this website-- would be to see if some version could be made for conlangers who would want to create language families rather than just individual languages, like how Tolkien created histories and families for all of the languages in Lord of the Rings. It could also allow some regenerating of vocabulary (via sound changes) to use 'next generation' words rather than the maybe not so random input someone might come up with.

I don't know. When I've already made an algorithm for generating words from two random apparently related languages, and you say it produces good results, I don't think I should simply discart it and spend a lot of time searching for a way to use real data in my game.

The idea is fine. The results are... idealized. Some may not like that (others might). Honestly, a simple substitution isn't very helpful except to just demonstrate the basic concept of comparative reconstruction. A very complex version of this might even result in something at the level of publishable research (a simulation that actually looks statistically at how languages change), but it's very far from that at this point.

As for the rest, I don't have much to add-- I'd suggest finding a target audience (conlangers really might be it) and then adjusting to that. Making a "good" game isn't just about it being "good" but also being what a particular audience actually wants. It's like having something "valuable"-- it only has real value if you find someone willing to pay for it. In this case, someone who wants to play it.

As I suggested at the beginning it's hard to think of any 'games' for linguistics that would become popular. Not sure how much time you should devote to this until you find an appropriate audience. Maybe look at some other games out there, if that's your goal?