I'm somewhat unknowledge.... make that un-nuanced, over steampunk. I get the general contours. Not against it, per se, just need to see actual ideas or visuals to understand.
But Talisman is an extremely flexible game, in most respects, so really many things can be fitted in. Even a Timescape more like the 2nd ED one. If you don't like it you don't have to buy it or play it, much like the Dragon to some players.
Of course anything that adds to or expands the horror themes of Blood Moon would be very welcome.
I think it was Jon/Talisman Island, or someone else who brought up the idea of expansions to the expansions.
So your idea could be an expansion or 'resonates well to' / for The Blood Moon.
In a similar way, there are other folk tales, myth-structures that also used the Enchanted World of the Fae, Fairies, Elfs, etc, so there's no reason that Oberon and Titania's Woodland couldn't be invaded by Norse Elves, or somesuch.
A small/POD/expansion with Asian themes could utilize Dragons, obviously, and possibly, thereby, resolve or 'lube' the mechanics of the Dragon expansion.
**** For what its worth, I do believe that FFG/designers have been listening to us, if for no other reason, then to see how similar our thoughts or ideas are, to their own. Some time ago I did post an idea about Dark/Light fate with the concept of a threshold being triggered by more of one than the other. I believe other's ideas are also similar to what we know about Woodland. So I'm just saying that as fans, we may give some inspiration or ideas to the developers.