Awesome, sounds like a plan.
Town progresses over time.
Instructor is walking out and about the whole time. Castle's foundations are shown in the middle of the town. Sign proclaiming NewTown is present.
Shops.. shops. Weapon shop, armor shop, healing+potion shop. Some of the shops could not be available for a bit until the town finishes building a few.
What other towns people should we have around?
What about having everything closed off except for one area? As you kill off all monsters in that area, the town builds more and they've also cleared a path which led to more monsters... ? This would certainly keep the player on the right track.
-Gan