The genetics were to be developed in different simulations. First by modifying the breeders (altered dormant original templates from the first players of the second program - now sealed off) for the new in-program simulation players and later on using the hybridized children for this or the later genetically modified supersoldiers (also using the original templates from the second program but added with Orion technology, or technological enhanced genetics; a sort of AI organic entity controlling the brain and CNS), which also participated in simulations for the military - now eager to conquest the other systems and in that tried to upgrade the hybrids.
The Zetas only demanded genetics created through genetic manipulation and upgraded via quantum technology, lifting the genetics to be able to respond to the energies on the higher levels of the ZMF3. The ZMF3 is entirely holographic and the hybrid children and supersoldiers are put in the chair, linked up via the Zeta technology and drugged to be able to go "full in" and be absorbed emotionally, mentally and from that give the needed physical reaction that "grows" genetics. These are then traded to the Zeta Alliance for technology. The hybrid children were later on to become the new breeders for the Zetas, in the long term project for the planet making it a new colony for the Zeta Alliances, and in that the survival of humanity, now equipped with superhumans and technology to be "equals" in this.
They do not know how the program works either. As a matter of fact they are as much victims in this as we are. But they are greedy victims, stupid victims telling themselves lies to justify their actions and in that, they are violating the natural rules of this universe.