Basically every other monster we've seen has had to inhabit a physical human body and puppet it around from the inside. We know that Mr. N doesn't do that, though, as in Ch10, he makes a comment about "costume types" and "transforming types."
But isn't it odd that we never actually see any other "transforming types?" Because if every single monster we've seen works like this, having to possess bodies to become "human," why would Mr. N be the only exception? From a meta perspective, it's not like his transformation ability is completely vital to the plot, is it? Some stuff would have to be rewritten, of course, but not enough to justify making the way he functions so drastically different from all the other monsters.
So couldn't this imply that he's not actually a monster? That "transformation types" aren't actually monsters?
In Ch10, he doesn't call himself a monster, but rather just "evil" and "a creature that kills people." Plus, in the chapter just before that, when we see his "monster form," it's still completely humanoid, just oddly proportioned and lacking facial details. And while I haven't reread the entire manga, I'm willing to bet that he actually is pretty consistent in not calling himself a monster directly.
And back to Ch10, he also makes a comment about how "you don't get to decide for yourself whether you're normal or a monster." After that, he calls Itou a monster before trying to get her to join with him in "destroying the world." (a.k.a. Creating his monster paradise.) Rereading this scene, it almost feels as if he's trying to compare her to himself. Itou's a human that's been branded a monster due to her (mental) abnormalities, and so couldn't Mr. N be a human that's been branded a monster due to his (physical) abnormalities?
Plus, while I can't be sure if it's just a quirk of the translation, but he says "our type" when describing the distinction between "transforming" and "costume" types to Itou. Is this implying that Itou is a "transforming type," despite being a human? "Transforming type" can be interpreted as "transforming into a monster," as well. And a constant theme in this manga is the comparison between "monsters" and "humans that don't fit in." So why would Itou be the only character in the latter category when we see so many monsters?
Though, if Mr. N really isn't a monster, and really is "human," then of course you gotta wonder where his transformation ability even came from. And while I don't have a good answer for that right, I do think the fact that he's so different from the rest of the monsters we've seen has to be important. Plus, Itou comes to her conclusion specifically after seeing Mr. N transform here, suggesting a connection between that and her answer, at the very least.