Generally speaking people know what they're getting into when they play a particular system. A James Bond game is all about being Bond and therefore can be expected to fulfil Bond tropes - the quips, the car chases, exotic locations and world-shattering evil masterminds. A Trail game is about Cthulhoid horror and can be expected to be moist and squamous, with a heavy dose of American gothic, possibly a hint of film noir. A Cyberpunk game is about dystopia, people lost in a futuristic landscape looking for meaning in all the wrong places.
You rarely see mixed genres in RPG settings, but it can be very interesting. The old Cyberpunk had a quasi-horror setting, the Night's Edge books, that worked remarkably well. In that setting you might encounter vampires, ghosts, Voodoo acolytes and terrifying dreamscapes. It had its faults; it leaned a little too heavily on serial killer tropes. But when it worked, it sang.
Body horror is a storytelling method where the narrative attempts to invoke intense feelings of physical and psychological disgust, or squick, and plays upon anxieties of physical vulnerability. One of the most effective versions of this I've ever seen on screen is the 1999 Takashi Miike movie Audition, in which a lovelorn businessman attempts to spark romance by auditioning women to 'be in his movie' - but things go badly wrong when he meets Asami, a fascinating woman with a past. And a few extra feet. There is a moment with a sack ... but I've said too much, and the trailers I can find online are a bit too spoilery, so I'll stop there.
The essence of body horror is making the human form do things we consider unnatural, though what we consider unnatural can be very revealing about our own prejudices. Stephen King once pointed out that, in the 1950s, you could freak American kids out just by having characters with a relatively mild physical issue. Even a bad case of the zits and shaggy hair was a major taboo, at a time when good hygiene, medical advances and three square meals a day had sorted out most of a generation's physical issues. Cleft palates, goiters, and many other ailments once relatively common, vanished almost entirely from the landscape. Bones lengthened, teeth straightened, complexions cleared. People forgot the old normal and replaced it with the new.
Clive Barker treads similar ground in Hellraiser, in which physical punishment - nails through the head, being skinned alive - masquerades as spiritual punishment. The spirit and the body are, apparently, one - mutilate the body, torture the soul.
Or Cronenberg, in films like Rabid, implying that a once-normal, healthy body can be tainted by, in this instance, a medical procedure, becoming a necrotic, corruptive influence.
It doesn't have to be awash with gore. Invasion of the Body Snatchers achieves a very similar goal without the slightest drop of blood, by creating invaders that look like us but aren't quite like us. All flesh, no soul. Whatever immortal shred resides within that flesh is annihilated when the Body Snatchers take over.
In my practice, I've seen how people have allowed their humanity to drain away. Only it happened slowly instead of all at once. They didn't seem to mind... All of us — a little bit — we harden our hearts, grow callous. Only when we have to fight to stay human do we realize how precious it is to us, how dear ...
If body horror is the subversion of the natural - exploding guts and all - then cyberpunk is the conversion of the natural. We think we know what normal is, and then our expectations are upended. The only difference is, in conversion we willingly accept the change, where in subversion change is forced upon us.
Manga and movies like Ghost in the Shell explicitly play with this concept, going on and on about the Ghost without ever really exploring the concept beyond muttering 'The Ghost!' as if they were all ravens programmed to say Nevermore every few minutes. Paying lip service to the spirit without really confronting the concept, yet taking every possible opportunity to show off fantastic new body conversions. At times you wonder whether there are any downsides to becoming a cyborg, beyond a compulsion to mutter 'The Ghost!' every other episode. Nobody changes; the Major is always the Major, Batou always Batou. Even when changes seemingly occur, the series reverts back to the status quo ASAP in the next episode. For all the characters talk about the Ghost, it rarely impacts the narrative.
Cyberpunk the RPG setting does something similar with Empathy/Humanity.
Empathy: Your ability to relate to and care for others, and take others into consideration. Particularly important as it offsets the effects of cyberpsychosis, a dangerous mental illness common in the Dark Future ... For every point of Empathy the Character has, they gain 10 points of Humanity (HUM) ... Cyberpsychosis Humanity Loss is deﬁned (for this purpose) as a loss of empathy for others and a corresponding loss of self-regard or sense of self preservation. Subjects with low Humanity have trouble emphasizing with themselves or others as "real."
All of this should sound very familiar to CoC and Trail players since this is basically the SAN/Stability mechanic, except where in CoC or Trail SAN is permanently lost by exposure to Mythos sources and temporarily lost by exposure to any number of frightening circumstances, Empathy and by extension Humanity is lost by grafting on technical adjuncts to the flesh. There's a side mechanic where Humanity can also be lost by exposure to terrifying circumstances, but it's encapsulated in a small chart on p. 231 and I wonder how many GMs run with the idea. Sanity is a major concept in CoC and Trail; Humanity doesn't seem as important in Cyberpunk.
It's difficult to make those numbers mean something without engaging the players' imaginations, and it's difficult to engage imagination though numbers alone. Particularly when those numbers have a mechanical consequence - in this instance, loss of the character. To cyberpsychosis, but really loss of the character to anything, whether it's cyberpsychosis or the Spaghetti Monster, is just as frustrating to the player.