I don't know if it's "better" (probably not) or "cool" (probably not either), but I think there are at least strong hints and at best evidence in canon that at least elves, and probably a number of other races, are actually former Althan slaves, and likely the result of gene-splicing. Most human races could be as well, though why they were so many ethnic groups is likely the result of local biases or usage of variant genetic stock. After all, the Althan were the masters of a galactic empire, so they could get genetic material from very different environments (including planar).
It's easy to explain the various sub-races with either variations in genetic source material or with creator bias.
It also, and that's one of my pet theories, explains nicely why scientific and technological progress on Kulthea post-First era is so slow: Althan did not need inventors, they needed servitor races, people who worked for them while they invented. The slaves' capability to perform their job was enhanced, but their creativity was inhibited, which, incidentally, also reduced the chance of slave revolt (especially for those who were assigned to menial labour). And, yes, the Althan had robots, but there is always some twisted sense of superiority in having sentient lifeforms serve, and given how they are described, I wouldn't put it past them to create servitor races just so that they could bask in their own superiority.
This does not mean that innovation is not possible. It only means it's less likely, and even long-lived or immortal races suffer from this "design feature".
As for whether the Althan used their own genetic material in their creations, I don't know. One part of me would say that they considered it blasphemy - after all, they *were* the master race. Another part of me would say that the K'Taa'Viiri would think themselves as superior to the common Althan, and could do it. One sure thing is that the Althan race is genetically compatible with some of their creations (though it might require genetic work once again), since part-K'Taa'Viiri do exist.