The sexualization of lycanthropy is a silly concern.
If someone sexualizes lycanthropy and turns it into weird fetish roleplay, eject them from the community.
Ita the same solution applied to people who get too juicy over tieflings, elves, halflings, genasi, gnolls, or minotaur. If that solution is insufficient for lycanthropes, then the policy and solution for being horny about any races needs to be reexamine.
Regarding the current system, it sucks. It has been this way through all of its minor variations since I've been here, even predating the current administration.
The argument that it's supposed to be a bad thing doesn't hold water. Statistical debuffs from disease, hunger, thirst, are bad things. We say lycanthropy is a curse, it's not supposed to good. But actual curses mechanically represented in the system (such as bestow curse) provide a malus without removing control of your character for an indeterminate amount of time.
Removing the ability for a player to control their character for more than a few seconds should only be used as an out of character punishment, ie a ban or character deletion.
Lycanthropy sucks because it's a random lottery where the prize is losing the ability to take actions for 20 minutes. Lycanthropy sucks because it forces characters to take actions that are so disruptive to the environment that we have ooc rules regulating them, but gets a free pass because weve had to make exceptions for that system. Lycanthropy sucks because a thematically similar curse, vampirism, provides benefits and operates in completely different way that doesn't remove agency (and is apparently so fun it has a months long waitlist even after being locked behind big boy awards). Lycanthropy sucks because the cure for it plays like a routine errand - going to the not so secret place(s) to gnosh on a loot item is as engaging as going to the market to get milk and eggs. You even get to wait in a checkout line while the item spawns but you can't chat with the checker because it's a container fixture and no rp that could be done during that wait is better served by occurring in thst location than any other place.
Don't remove player control of characters, remove lycanthropys current implementation as a system that encourages people to get up and get a coffee instead of playing the game.