Hey, I really like that you introduced Sarah. It really does allow it to take the story many new ways. With Nicole enjoying the changes I think it would be a nice contrast to have the other cheerleader struggling with them. Personally, I'd make Sarah to be on the smaller end of scales. That way we can have her not only loosing the femininity but more so, from the sexy one she changed into a completely unremarkable member of the student body thus loosing her social status. If she'd become a hulking type she'd remain important and so she'd have less reasons to be mad at Nicole. I think that having it this way would allow for some interesting developments later as Sarah strives to return the world to the way it was before (not realizing that one can't reverse the wishes) and her primary motivation becomes the revenge on Nicole for taking what she loved and revenge on Jon for becoming the new epitome of 'soft and jiggly' sexy.
I think both men and women should keep their genitalia or otherwise, just like you said, this would be no different from a worldwide gender swap. Of course this doesn't mean they should remain unchanged. Presumably, we want the guys to be able to wear feminine clothing now. Why don't make it so that their penises are really small or even hidden and then expand drastically with erection? As a bonus that would make arousal extra embarrassing for them. As far as getting pregnant is concerned why don't make it so that the conception has to happen the 'usual' way, i.e. a male has to deliver his semen into a female's vagina where it fertilizes some eggs. Then you'd just have to deliver the fertilized eggs back to the male's body. Evolutionarily this process should be invasive to allow forced impregnation necessary in nature. I have an idea on how that could be done and when it comes to it I'm happy to write an episode concerning it.
Yesterday I wrote the episode really late and only now when I read it I realized how bad quality writing it was, sorry. I wanted to see the exaggeration happen the most straightforward way but if you had different plans for it that's fine. I'm very curious how you will tackle this...