In this version, yes - it's their primary goal to stamp out dragons and the Wizards (and other spellcasters) that are making them. Though there might be some out there trying to "fight fire with fire" or just be renegades, trying to covertly use magic and not get themselves into too much trouble. It's sort of an "aftermath" campaign following on my son's original idea.Do the chars / players know that using magic is creating monsters / dragons?
I guess at one point they will have to find out, but do they know from the start? Otherwise some might be in for a rude awakening
No. Because of this.You can't play non-human races; they are the enemy or their goals are too mysterious to otherwise allow them to be playable.
Probably not exactly as depicted. Humans only meh curated list of 6 races or whatever would be more interesting.