Are the monsters in new home more mutated tgen those of snowdin and the ruins due to their close proximity to the Glitch
Mmmm… yes and no. The physical mutations are worse there, but that’s only in a select few monsters. The toll the Hunger takes on the mind is stronger there, and drives the monsters far more mad.
How would Papyrus act, if he didn't suffer from dementia? Would he become something like Sans, a terrifying hunter that holds a good side for his loved ones?
Sans only retained what he has left of his sanity by removing himself from his soul completely. The corruption of the Hunger is too much to keep a stable mind and remain connected to the center of your being, so instead, he chose to close himself away from nearly all emotion. Only what he feels for his family remains now, and even that is warped, at times.
Papyrus would not be able to do that. He loves and cares too deeply, and without his willful delusions, he would lose his mind entirely, and likely either have to be killed, or perish on his own from the trauma of the corruption.