When thinking about simulating emotions, the task of simulating all possible emotions that a human can display is daunting. And the chances of generating absurd behaviour increase with the number of emotions or moods that are possible. Perhaps this is another opportunity for coming at the problem from the outside.
What if each character only has two emotions and different characters have different sets of emotions? As a group, they would provide for an emotionally rich presentation but every single character would be easy to read.
The two emotions that each character possesses would be opposites, so that we don’t have a scale between neutral and happy, and another one between neutral and angry. But we use one continuous scale between happy and sad.
One character would always hover between happy and sad but would never be angry or disappointed. Another one would always be comfortable or frightened, yet another one always hateful or benevolent, or something in between.
This way we would not need the complex layering of personality, mood and emotions. For each character, this one set of emotions would automatically express the mood (the position in between the extremes) and the personality (the choice of emotions).
This concept is limited by requiring opposite emotions. So complex emotions like nostalgia or disgust would be near impossible to express. But simplification will have to happen somewhere anyway. So it might as well be here.
To come up with the pairs of emotions is an act of authorship that is not neutral.
Also, there is a limited list of emotions that are feasible to express in a game. So when there are more characters than emotions, several characters would have the same personality. This does not necessarily have to be a problem (as Animal Crossing shows).