You are not insane! You are right...good idea as well Kate
The game does need more NPC's that are not quest givers as well. I think they should add low and high level Navy and EITC and Private assassins in the four major islands. These offensive NCP's should not attack unless attacked first by a pirate. They all should walk or run around the isles. Sometimes, even defend the port against Jolly Roger invasions(would be interesting). Also like Tom said, English men and other people living in the Caribbean living their daily lives. There are so many houses, but there is no one living or standing or working by them. This would be a great way to attract new players because it would add more realism and make players feel like they are a real pirate.
Good job in bringing this up Tom!