Planar stuff > biology. They would have their Dwarven or Elven culture and other background stuff, but they would be Tieflings. It doesn't need mechanics...though I do think Heritage Backgroundss with requisite Feats could help here.
Brotherwise and Drafonsteel have put together a formal axtual play one-shot with a bunch of actors types, "Echoes of the Gatjer". Haven't had the opportunity to check it out, but here it is:
I think Wotc really missed an opportunity by not having some form of formalized hybrid character rules in 2024 that would work for diverse combos without the weirdness of "half"-races
I mean, they already are that in Monsters of the Multiverse and the new PHB: Genasi, Aasamir and Tiwflongs can be wither Small or Medium and are specifically described as coming from any other Species and depicted in the art diversely (there is an Aasamir in the PHB who is clearly from a Dwarven...
Or they were in Embarrassing all alomg just like the Drafonborn, but earlier descriptions just folded them all under the label "Lizaedfolk". Easy peasey.
My experience for D&D milestone os that itbisnoften nebulous and at DM discretion (fiat), but that went back to the start for me as my 3.x DM used plot based XP thst effectively worked like the current milestone approach.
That is what I like about the Cosmere RPG approach: it is milestone...
That's what I appreciate about the DCC system: it has a certain objective predictably and rhe zero to hero arc like standard D&D XP progression, but it incentives creative engagement rather than any specific "gameable" behaviors.
Treasure for XP does encourage behavior that fits a genre of story, at least. Combat for XP really brought out weird sociopathic results in 3E, to my mind.
It is interesting to consider Clasic Traveller here, a game with no level advancement mechanism at all, that was also trying to encourage the same pulpy mercenary behavior as OD&D, bitnthrough narrative structures like mortgages and ebt collection.