I think that once happiness starts to really work, you could place some liftable objects that increase/lower happiness. I don't mean placing skeletons in front of your village but creating items that decays slower, like building piles of bones or fountains, and having those negatives one affect their owner slightlier. Also those items should tell wandering players about how they should behave around your village.
Happiness could affect the quality of items you create, positively or negatively, making you wanting to avoid working around skeletons and giving a motivation to send those skeletons to your enemies farms.
Being unhappy should decrease the quality of the items you make (being 100% unhappy would make you craft a Q7 stone axe at start) while being happy slightly increases the Q of items (So your item's Q doesn't skyrocket).
This could also allow players to start using psychological warfare and customize the world in many ways, creating more diverse enviroments, like a raider's camp having bone piles around.