I think half-breeds are a good idea, sterile or not. What I think the best thing to do with half-breeds is how everyone would judge that character.
Say the world generally looked down upon them or even just certain ones, be it subtle snips or full blown hatred I want to see it in the dialogue. I want my choice to have traits from both races punished by racist merchants and prejudiced guardsmen, yet rewarded by opened possibilities in gear, traits, skills, etc. Hell, bring gender into things too. Things like that are something I'd really love to see.
Sorry if it was already mentioned.