Alright, if you woke up in Gensokyo one day, (yeah.... it's free real estate for yokai) for the human village you might turn into a everyday Joe in there or leave with Reimu. Your fear are also going to be harvested and overall gonna be watched by yokai (Although they won't kill you if you identify as a villager) Hence, Gensokyo is dangerous for humans which is the home of monster. About the "status quo", it is true that they need to maintain the balance like yin and yang, if the humans exist yokai can gather faith and if they don't they're not going to live long as that's one of the reasons gods from the outside migrated to Gensokyo.
Going back to the topic, in the human village, you are going to be favored by gods and demigods. I.e Harvest gods, Tengu, Kapa, sages. Sages will since they were once human who have meditated a long time and likely to protect the village from danger, Tengu and Kapas are also here to aid the village as they're going for the "status quo" or friendship 'cause I only see those three types to be actually paying some mind to the village.
The very purpose why Gensokyo is created is mainly due to the sages thinking "this could be a jolly good place for yokai to live in" but I've my own lore: back from the beginning of this land, yokai are very common around Japan, They were being archived by japaneses, Akyuu is one of 'em as there were war between humans and yokai the emperor sets out eighty thousand men to hunt down one of the evil yokai of japan and that's didn't work. (Although two of 'em are personally screwed by the emperors touchy subjects) and legendary samurai and bowman to took out two of 'em. That would make yokai hatred and fear grow and will seize a land in the mountrain and call it home and later set up a barrier while human resides in making the former hatred disappear. Another theory is yokai saw the human populations drastically improved and thought to themselves that they too should make a home to live and kappas, sages, and most likely oni encouraged and there Gensokyo.
Very nice channel, who detailed cover all of japan be it history, economy, health, folklore and so on.
Now time to answer this question with my views.
As you said, they might be based on our belief, we've always see these monsters as non humanoid figures, demonic being and all the eldritch horrors but why do they look like young women? and if anything they should look tad bit older than their in game portrait. Maybe things works differently in Gensokyo? or those who are in effect of the great Hukrei Barrier; if you may, compare those portraits in game starting from pc-98 era to latest window entry, Reimu, Marisa, Alice looks like they have aged in Pc-98 and thus mature looking but go to the window era one by one and they appear to be younger; this might be the artists' different artstyle but if we take account to it, then, how time works in Gensokyo is truly enticing. Oh, and with faith yokai got tamer and became young looking women?
Another thing to add is, they're simply trying to look for prey, "why take a form of a man when you can be a woman and hunt those pesky men" but this would spark discussion as there're nearly full of woman yokai and not a single sight of a man can be seen. (I'm aware there're average joe that isn't important to the plot but still) It's too good to be true and this isn't logical enough as yokai can take up any form they like but why is Korindou a male? Okay, to my last theory; human are intelligent and they improved over time as opposed to yokai, there aren't many smart cookies. So, they take the form of human and can take notes down of human behavior, trading with humans etc.... it's easier to take other forms and their original form (I.e Suika travel in mist form, and possibly of screen original forms of our beloved Touhous)
But
the main reason is that humans are in perfect balance in strength, wisdom, wit, pride while most of the specimen has only one great deeming quality and can't master it enough. Humans can't fly but they invented planes, humans can't swim, they made scuba gears and all kinds of machinery. Even if the humans' tech, strength, are inferior then yokais, they have the mind and are willing to improve and that my friend is why yokai in Gensokyo (prefer to) looks like young woman. (Young 'cause they inherited the female mind of us and are sensitive about how they look and their age but there're a few who doesn't care: Mamizou and the onis since they don't care about that, bring sake, strength, pride and your beliefs to the table Human)
Well, you can't have everything good like yin and yang there must also be the shocking horrors as the tone changes light-hearted from fandom to somewhat grimdark but also chill that will not be afraid to get serious once in a while like in Touhou 17 that brought my shock factor to maximum as I saw two faction fighting for power and double plot twist as both sides were not good but one is tamer than the other. (And I read a new eagle boss in the Extra scenario and got so hyped)
Oh yes, the cultural difference play so much since most of the character are from mythologies from Japan, China, Greek and possibly others too. Anyways, it's always nice for me to learn culture and religion of other countries and yes, History sparks on my mind. Reality is often harsh as I said if you have good there must also be the bad; the essence of "Giving You A Brief History Of The Origin In Fairy Tales" are going to work especially if you're not hoping for it. Gensokyo looks very friendly in the first glance isn't? but as the true origins were revealed and there goes the perfect fantasy world, don't get your view on Gensokyo get altered as everything have balance and it isn't all rainbows and candies neither the bloody gore stuff that the yokai are always fighting and humans are always 100% eaten. It's in the middle, remember that Numenor.
Aye, I did say I'll give you my opinions on your threads and this is a very good topic that you've brought up. Yeah, last time I wasn't there so your image got shattered to piece. At the end of the day, if a character and music from a franchise (doesn't have to be the same) speaks to your soul directly and you're having a good time and memories because of 'em, then, I'm positive that I've answered your last question.