I definitely like the tree environment. I think that trees have been an under-utilized space for game environments, with everything based on the right angles of coordinate systems and human buildings. What would the N game be like in a forest instead of a tile-based world?

However, I think your gameplay could be developed past the gimmicky idea of squirrel humping to a more deep and strategic game about the evolutionary dynamics of sexual selection. Here's the idea: the object of the game is to get as many offspring as possible, not just hump as many squirrels as possible. Each squirrel would have its own genetic code determining its behavior and physical characteristics, which is passed on to its offspring. The player's squirrel would not be the only male; instead there would be many squirrels eating and mating in one big happy ecosystem. In fact, the player's squirrel might not always be male either, but we'll get to that later.

So let's say you are chasing one particular female. Maybe she is not putting up much of a fight (a behavior based on her genes). If she's this easy, then there's a higher probability that she has already been impregnated by another male. So is it worth it going after her?

The game would probably be separated into rounds, based on generations of squirrels. The simplest way I can think of is when your squirrel dies, of old age (five minutes) or something more violent, it goes to the next generation. Then, your control switches to one of your offspring, at random. This way, you have some incentive to include long-term strategy in your mating habits. You want to make sure most of your babies grow up to be strong, healthy squirrels, since you will have to be one of them in the future, and you don't get to just choose the best one! Since you get points for how many offspring you have each round, there is some interesting tension between trying to mate with every female you can, and only mating with the good ones.

Not only that, but you might end up controlling a female squirrel, which produces another set of gameplay choices. As a female, you can only have one litter of babies at a time, unlike the males, who can father babies for each female they impregnate. This means you will have to emphasize quality over quantity, so you will definitely want to mate with only the best males. Maybe they will fight for the privilege of mating with you and you can allow the winner to mate. Also, there is the issue of parenting. It's better for you to have males who will stick around and get food for you while you are pregnant, instead of running off to mate with other females. (of course, like lifespan, pregnancy time would be very much shortened compared to real life)

So there are kind of two games in one, female and male, as well as many more levels of decision-making (short-term and long-term and in-between), which is important to an "addictive" game experience. Maybe it could even be used in sex-ed classes! :p

Let me know what you think of this idea, and if you want any help in the design or programming of the game.