Its star wars...stop over thinking it

You're talking about phenotypes, not ethnicity as such as ethnicities are shared cultural, social, linguistic and religious experiences that bind a group together, creates a shared identity, sometimes this takes the form of a national identity, but not necessarily. It's much more a social complex of factors, rather than hair or skin colour, which is more fitting to refer to as phenotype as it stems from genetic and environmental factors, more than linguistic and social factors. Of course favoured hair or skin colour can, and probably will, be shaped by cultural and social factors (ideas of beauty change over time), so there is of course no clear distinction, but in this case I'd think it's more fitting and precise to refer to it as phenotype rather than ethnicity.

As for your questions, I'd think any phenotype should be more or less possible. Want blue hair? Why not - whether it's natural or genetic modification could be up to the player of course, as long as there is no expectations of mechanical benefits beyond what anyone would get from changed hair colour, go for it!

I know there isn`t any one true answer to this question. But how would you handle it in your game? Could someone play a human with bright red skin and natural purple hair if they wanted to, saying it was just a human variation?

If it falls outside of what we consider natural body coloration, and it isn't a result of artificial pigmentation, it would fall under the category of Near-Human. In speculative fiction, base level humans are the measurement by which the "alien-ness" of sapient creatures are measured. Mucking about with that makes measurement difficult or impossible.

Actually, every one is Star Wars is an alien... from a certain point of view. Humans don't even have a true home world. Anyone running an Archaeologist campaign, there's an idea for you. Where did humans originate from?

I think it's safe to say Coruscant is the human birth world. According to EU lore, what became the Mandalorians was a different species called the Taung. It evolved simultaneously with humanity, who were originally known as the Zhell. They were driven off world some point hundreds of thousands of years ago.

I'm actually running an archaeology/artifact-based story arc now but it concerns the Celestials, the super advanced race that predates even the Rakatan and dragged the various planets of the Corellian system into their orbits.