KP said it was alright if I used the Thylacine
There's a big difference between a creature that was bordering on extinction in the 20s, and a
Megatherium, Gira. Please consider the difference. I allowed very recently extinct creatures, for the sake of variety. Afterall, ARPG had ISS to compete with [and it was very thoroughly squashed, as anyone present during that time will confirm].
but enough of that.
As for SHRPG, I agree with Doc's points. G4E, Not necessarily the States. By West, it generally means not Asia, Eastern Europe, Africa or Australia. But a general theme set around the States and Western Europe. I'm not saying we cover it all. That'd make activity next to non-existent. What I'm suggesting is to base a fictional city on the elements of those regions. The gap between those two would be blurred very well by a booming tourist industry.
We could make the city a coastal paradise of sorts. A city with white sandy beaches, beautiful architecture, Mega-Corporations competing for dominance of the city's commercial branches [electronics, clothing, vehicles, so on and so forth], a suburban area a fair distance away from the busy centre of the city.
It'd be a city that took pride in it's law enforcement, having specialised Unnatural Combatant Countermeasure Squads (U.C.C.S.), similar to S.W.A.T. teams, that dealt with mutants indiscriminately. Heroes would be appreciated, but not exempt as targets of the law enforcement. For example, if their fighting caused damage to public property or killed civilians, they'd be counted as threats to public safety too. The resulting peace would mean that the city would be a major tourist destination, luring in people from all over the world [which is what I meant by the gap and lines between ethnicities being blurred].
Of course, despite the difficulties villains would face, they stand to gain a lot by targeting a place like this. Be it simple goals like money [which a city that's famous for being a tourist hot spot and coastal paradise would have loads of] or more complex goals such as psychological influence [imagine if a terrorist destroyed what seemed to be the most secure place on earth, without being caught and without warning, taking out thousands or even hundreds of thousands of lives in the process. don't you think everyone would **** themselves when it's mentioned that that same terrorist is believed to be planning a strike somewhere near them, soon?

].
The heroes, on the other hand, could have a general acceptance from the community similar to the X-Men. Meaning, not much at all. The power they have frightens people [which subsequently sparked the assembly of the U.C.C.S. in the first place. to help improve public safety and keep the peace], and so they're not cared for much. They would in turn be doing their best to fight crime to help get rid of the impression the public has that they are dangerous and need to be destroyed.