I enjoyed the story and in refernce to your questions, the pacing was good and enjoyed the drip feeding of the herds customs (pretty babies all belong to the smarty etc), as it started to hint at old creepy horror movie style isolated towns with their own ways of dealing with the unknown.
The hole turning out into what was little more than an extended cage for enforced classroom teaching was a bit of a letdown, but this is a hugbox-ish story.
A unexpected twist would be some sort of cargo cult ritual where the babies are put into a human made hole as a sacrifice (which turns out to be the baseplate and foundations for a fireworks launcher where the town sets up a major display every year). The fluffies have found an unwitting correlation where the more babies they sacrifice, the more food gets left behind by the picnicking humans (the fire works inadvertently grabs a fluffy and the crowd gets showered by body parts when the firework explode, spoiling their food and thus they abandon it).