@okami well, The childhood friend killed herself to give closer to the audience since it seems the series ended. Story wise, for the purpose of relieving the MC of his guilt/burden/trauma whatever of his dead younger sister by serving as a "replacement", and whatever "transposition" of these feelings to his new step-sister.
Yes the old lady died a long time ago before the last loop save point. She never came back to the house before the last loop.
Author never explained much about what the replacements are and why the are there. I assume if the story wasn't axed, they would have went looking for the step-father and his research, who might know the answers.
I guess the replacements aren't actually the same person as the original, since it occurs when the original person is near death. Probably the original person dies and the replacement takes over. Who knows. It was never explained. But if the replacement doesn't realize it themselves, and act exactly like the original and doesn't do any harm, then there is the ethical dilemma when killing a replacement to harvest the cores if they truly have human rights like the original, because that would mean murdering a replacement is just like murdering an original person. I guess that was what the author was trying to get at when presenting the townspeople and the mayor in opposition to the MC, who allow replacements to live there and defend them and their way of life.
However, one thing that didn't make sense to me is why the conversion to a replacement took a long time for the step-sister to occur. I would have assumed a replacement happens immediately after near death experience. So why did the step-sister retain herself after recovering from her illness? Maybe the father immediately fed her cores while she was sick to stop the process? And I don't understand why she lost her legs. Because doesn't the normal process of becoming a replacement retain all your body parts?