I could see a toy like this having lots of expansion packs, like veins with blood-pumping action and nervous systems to be added to the monster. Light-up eyes. A voice box with a wailing scream which could be set to go off at certain times like an alarm clock.
Once kids constructed their creatures they could stand them upright beside their bedroom doorways, and feel safe and protected. Or maybe kids would be mortified to see that thing standing there when they woke up in the middle of the night to get a glass of water. I know I can't speak for all kids, but I personally would have loved it.