Interesting I didn't know that. In Italian there is no neutral gender, Latin had it but in modern Italian it has been lost.

> Does this de-emphasise their femininity, or increase their "sexual object"-ness?

My hypothesis is that having it might de-emphasise the link between grammatical gender and gender identity of a person, this link is very strong in the English language because in English the only time you use gendered language you are talking about a person, in those other languages you use gendered words to refer to a pot or a chair :-)