Lo-Fi Games

So I decided to try my hand at editing the normal maps for human females because I wasn't a fan of the severe breast shadows, and I've discovered a strange issue.

The files under "character/skins/human_female" (and "hu", as well), such as "human_female_body_normal.dds" simply do nothing. Changing them out doesn't change anything in game, and I'm seeing quite a few people having the same issue when they're trying to install new textures there. I even tested changing out Shek textures under "bone_female" and they work just fine, you can edit/change those files and they appear in game properly.

Are we simply not able to edit human textures anymore? Did an update at some point this year do this? Because I know it worked before.

There is nothing special about the human skin textures. The only way editing them would do nothing is if the files are overridden by a mod.
The character skins in hu are are not actually used. Check the FCS to see which files are used. Character skins can have three normal maps.

Another issue to note is the normals on the model get a bit messed up towards ends of the breast size slider due to how the bones are scaled.

About the used normals (in human_male / human_female I presume ? ), they are made of shades of grey instead of usual normals, how did you actually obtain that result and is it mandatory or regular normal (the blueish ones) can work ?

Those grey normal maps use DXT5N (or dxt5nm). Some dds exporters have this in the export options which converts an ordinary normal map to the grey version.
There is information about the format online, but essentially it is a standard normal map with the red channel stored in the alpha channel and the green channel stored as greyscale in rgb channels, saved with standard dxt5 compression. The purpose is to avoid artefacts as normal maps do not work well with dxt compression.
Only characters and animals use this format, and yes you do need to use it.