In H. G. Wells's The Island of Doctor Moreau, the shipwrecked hero Edward Pendrick is walking through a forest glade when he chances upon a group of two men and a woman squatting around a fallen tree. They are naked apart from a few rags tied around their waist, with "fat, heavy, chinless faces, retreating foreheads, and a scant bristly hair upon their foreheads." Pendrick notes that "I never saw such bestial looking creatures."

As Pendrick approaches, they attempt to talk to him, but their speech is "thick and slopping" and their heads sway as they speak, "reciting some complicated gibberish". Despite their clothes and their appearance, he perceives the "irresistible suggestion of a hog, a swinish taint" in their manner. They are, he concludes, "grotesque travesties of men".

Wandering into Doctor Moreau's operating room one night, Pendrick eventually uncovers the truth: his host has been transforming beasts into humans, sculpting their bodies and their brains into his own image. But despite his best efforts he can never eliminate their most basic instincts, and the fragile society soon regresses to dangerous anarchy, leading to Moreau's death.

It is 120 years since Wells first published his novel, and to read some recent headlines you would think that we are veering dangerously close to his dystopic vision. "Frankenstein scientists developing part-human part-animal chimera," exclaimed the UK's Daily Mirror in May 2016. "Science wants to break down the fence between man and beast," the Washington Times declared two months later, fearing that sentient animals would soon be unleashed on the world.

The hope is to implant human stem cells in an animal embryo so that it will grow specific human organs. The approach could, in theory, provide a ready-made replacement for a diseased heart or liver – eliminating the wait for a human donor and reducing the risk of organ rejection.

It's going to open up a new understanding of biology

These bold and controversial plans are the culmination of more than three decades of research. These experiments have helped us understand some of the biggest mysteries of life, delineate the boundaries between species, and explore how a ragbag bunch of cells in the womb coalesce and grow into a living, breathing being.

With new plans to fund the projects, we are now reaching a critical point in this research. "Things are moving very fast in this field today," says Janet Rossant at the Hospital for Sick Children in Toronto, and one of the early pioneers of chimera research. "It's going to open up a new understanding of biology."

That is, provided we can resolve some knotty ethical issues first – questions that may permanently change our understanding of what it means to be human.

For millennia, chimeras were literally the stuff of legend. The term comes from Greek mythology, with Homer describing a strange hybrid "of immortal make, not human, lion-fronted and snake behind, a goat in the middle". It was said to breathe fire as it roamed Lycia in Asia Minor.

At least 8% of non-identical twins have absorbed cells from their brother or sister

In reality, chimeras in science are less impressive. The word describes any creature containing a fusion of genetically-distinct tissues. This can occur naturally, if twin embryos fuse soon after conception, with striking results.

Consider the "bilateral gynandromorphs", in which one side of the body is male, the other female. These animals are essentially two non-identical twins joined down the centre. If the two sexes have wildly different markings – as is the case for many birds and insects – this can lead to a bizarre appearance, such as a northern cardinal that had grown bright red plumage on half of its body, while the rest was grey.

Most often, however, the cells mix to form a subtler mosaic across the whole body, and chimeras look and act like other individuals within the species. There is even a chance that you are one yourself. Studies suggest that at least 8% of non-identical twins have absorbed cells from their brother or sister.

The mixed bag of animals from Greek legends certainly cannot be found in nature. But this has not stopped scientists from trying to create their own hybrid chimeras in the lab.

Janet Rossant, then at Brock University, Canada, was one of the first to succeed. In 1980, she published a paper in the journal Science announcing a chimera that combined two mice species: an albino laboratory mouse (Mus musculus) and a Ryukyu mouse (Mus caroli), a wild species from east Asia.

Previous attempts to produce a hybrid "interspecific" chimera often ended in disappointment. The embryos simply failed to embed in the uterus, and those that did were deformed and stunted, and typically miscarried before they reached term.

We showed you really could cross species boundaries

Rossant's technique involved a delicate operation at a critical point in pregnancy, around four days after mating. At this point, the fertilised egg has divided into a small bundle of cells known as the blastocyst. This contains an inner cell mass, surrounded by a protective outer layer called the trophoblast, which goes on to form the placenta.

Working with William Frels, Rossant took the M. musculus and injected it with the inner cell mass of the other species, M. caroli. They then implanted this mixed bag of cells back into the M. musculus mothers. By ensuring that the M. musculus trophoblast remained intact, they ensured that the resulting placenta would match the mother's DNA. This helped the embryo embed in the uterus. Next they sat back and waited 18 days for the pregnancies to unfold.

It was a resounding success; of the 48 resulting offspring, 38 were a blend of tissues from both species. "We showed you really could cross species boundaries," Rossant says. The blend was apparent in the mice's coats, with alternating patches of albino white from the M. musculus and the tawny stripes of the M. caroli.

Even their temperaments were noticeably different from their parents. "It was quite obviously a weird mixture," says Rossant. "M. caroli are very jumpy: you would need to put them at the bottom of a garbage can so they don't jump out at you, and you'd handle them with forceps and leather gloves." The M. musculus were much calmer. "The chimeras were somewhat in between."

With today's understanding of neuroscience, Rossant thinks this could help us to explore the reasons why different species act the way they do. "You could map the behavioural differences against the different regions of the brain that were occupied by the two species," she says. "I think that could be very interesting to examine."

Time magazine described the geep as "a zookeeper's prank: a goat dressed in a sweater of angora"

In her early work Rossant used these chimeras to probe our basic biology. Back when genetic screening was in its infancy, the marked differences between the two species helped to identify the spread of cells within the body, allowing biologists to examine which elements of the early embryo go on to create the different organs.

The two lineages could even help scientists investigate the role of certain genes. They could create a mutation in one of the original embryos, but not the other. Watching the effect on the resulting chimera could then help tease apart a gene's many functions across different parts of the body.

Using Rossant's technique, a handful of other hybrid chimeras soon emerged kicking and mewling in labs across the world. They included a goat-sheep chimera, dubbed a geep. The animal was striking to see, a patchwork of wool and coarse hair. Time described it as "a zookeeper's prank: a goat dressed in a sweater of angora."

Rossant also advised various conservation projects, which hoped to use her technique to implant embryos of endangered species into the wombs of domestic animals. "I'm not sure that has ever entirely worked, but the concept is still there."

Now the aim is to add humans to the mix, in a project that could herald a new era of "regenerative medicine".

For two decades, doctors have tried to find ways to harvest stem cells, which have the potential to form any kind of tissue, and nudge them to regrow new organs in a petri dish. The strategy would have enormous potential for replacing diseased organs.

The aim is to create chimera animals that can grow organs to order

"The only problem is that, although these are very similar to the cells in the embryo, they are not identical," says Juan Carlos Izpisua Belmonte at the Salk Institute for Biological Studies in La Jolla, California. So far, none have been fit for transplantation.

Izpisua Belmonte, and a handful of others like him, think the answer is lurking in the farmyard. The aim is to create chimera animals that can grow organs to order. "Embryogenesis happens every day and the embryo comes out perfect 99% of the time," says Izpisua Belmonte. "We don't know how to do this in vitro, but an animal does it very well, so why not let nature do the heavy lifting?"

The Soviet ape-man Today's plans to build a human-animal chimera may have provoked controversy, but they are nothing compared to the scandalous experiments of Ilia Ivanov, also known as the "Red Frankenstein". Hoping to prove our close evolutionary ties to other primates once and for all, Ivanov hatched a crackpot scheme to breed a human-ape hybrid. Starting in the mid-1920s, he tried to inseminate chimps with human sperm, and even tried to transplant a woman's ovary into a chimp called Nora, but she died before she could conceive. When all else failed, he gathered five Soviet women who were willing to carry the hybrid. However, the prospective father – called Tarzan – died of a brain haemorrhage before he could carry out his plan. Ivanov was eventually arrested and exiled to Kazakhstan in 1930 for supporting the "international bourgeoisie"; a crime that had nothing to do with his grotesque experiments.

Unlike the "geep", which showed a mosaic of tissue across its body, the foreign tissue in these chimeras would be limited to a specific organ. By manipulating certain genes, the researchers hope they could knock out the target organ in the host, creating a void for the human cells to colonise and grow to the required size and shape. "The animal is an incubator," says Pablo Juan Ross at the University of California-Davis, who is also investigating the possibility.

We already know that it is theoretically possible. In 2010 Hiromitsu Nakauchi of Stanford University School of Medicine and his colleagues created a rat pancreas in a mouse body using a similar technique. Pigs are currently the preferred host, as they are anatomically remarkably similar to humans.

If it succeeds, the strategy would solve many of the problems with organ donation today.

"The average waiting time for a kidney is three years," explains Ross. In contrast, a custom-made organ grown in a pig would be ready in as little as five months. "That's another advantage of using pigs. They grow very quickly."

In 2015, the US National Institutes of Health announced a moratorium on funding for human-animal chimera

Beyond transplantation, a human-animal chimera could also transform the way we hunt for drugs.

Currently, many new treatments may appear to be effective in animal trials, but have unexpected effects in humans. "All that money and time gets lost," says Izpisua Belmonte.

Consider a new drug for liver disease, say. "If we were able to put human cells inside a pig's liver, then within the first year of developing the compound, we could see if it was toxic for humans," he says.

Rossant agrees that the approach has great potential, although these are the first steps on a very long road. "I have to admire their bravery in taking this on," she says. "It's doable but I must say there are very serious challenges."

Many of these difficulties are technical.

The evolutionary gap between humans and pigs is far greater than the distance between a rat and a mouse, and scientists know from experience that this makes it harder for the donor cells to take root. "You need to create the conditions so that the human cells can survive and thrive," says Izpisua Belmonte. This will involve finding the pristine source of human stem cells capable of transforming into any tissue, and perhaps genetically modifying the host to make it more hospitable.

It would be truly horrific to create a human mind trapped in an animal's body

But it is the ethical concerns that have so far stalled research. In 2015, the US National Institutes of Health announced a moratorium on funding for human-animal chimera. It has since announced plans to lift that ban, provided that each experiment undergoes an extra review before funding is approved. In the meantime, Izpisua Belmonte has been offered a $2.5m (£2m) grant on the condition that he uses monkey, rather than human, stem cells to create the chimera.

A particularly emotive concern is that the stem cells will reach the pig's brain, creating an animal that shares some of our behaviours and abilities. "I do think that has to be something that is taken into account and discussed extensively," says Rossant. After all, she found that her chimeras shared the temperaments of both species. It would be truly horrific to create a human mind trapped in an animal's body, a nightmare fit for Wells.

The researchers point to some possible precautions. "By injecting the cells in a particular stage of embryo development, we might be able to avoid that happening," says Izpisua Belmonte. Another option may be to program the stem cells with "suicide genes" that would cause them to self-destruct in certain conditions, to prevent them from embedding in neural tissue.

Even so, these solutions have not convinced Stuart Newman, a cell biologist at New York Medical College, US. He says he has been worried about the direction of this research ever since the creation of the geep in the 1980s. His concern is not so much about the plans today, but a future where the chimera steadily take on more human characteristics.

"These things become more interesting, scientifically and medically, the more human they are," says Newman. "So you might say now that 'I would never make something mostly human', but there is an impulse to do it... There's a kind of momentum to the whole enterprise that makes you want to go further and further."

How we talk about humans during this debate may inadvertently change how we look at ourselves

Suppose that scientists created a chimera to study a new treatment for Alzheimer's. A team of researchers may start out with permission to create a chimera that has a 20% human brain, say, only to decide that 30% or 40% would be necessary to properly understand the effects of a new drug. Scientific funding bodies often require more and more ambitious targets, Newman says. "It's not that people are aspiring to create abominations… but things just keep going, there's no natural stopping point."

Just as importantly, he thinks that it will numb our sense of our own humanity. "There's the transformation of our culture that allows us to cross these boundaries. It plays on the idea of the human as just another material object," he says. For instance, if human chimera exist, we may not be so worried about manipulating our own genes to create designer babies.

Newman is not alone in these views.

John Evans, a sociologist at the University of California San Diego, US, points out that the very discussion of human-animal chimera focusses on their cognitive capacities.

For instance, we might decide that it is okay to treat them in one way as long as they lack human rationality or language, but that train of logic could lead us down a slippery slope when considering other people within our own species. "If the public thinks that a human is a compilation of capacities, those existing humans with fewer of these valued capacities will be considered to be of lesser value," Evans writes.

Our gut reactions should not shape the moral discussion

For his part, Izpisua Belmonte thinks that many of these concerns – particularly the more sensational headlines – are premature. "The media and the regulators think that we are going to get important human organs growing inside a pig tomorrow," he says. "That's science fiction. We are at the earliest stage."

And as an editorial in the journal Nature argued, perhaps our gut reactions should not shape the moral discussion. The idea of a chimera may be disgusting to some, but the suffering of people with untreatable illnesses is equally horrendous. Our decisions need to be based on more than just our initial reactions.

Whatever conclusions we reach, we need to be aware that the repercussions could stretch far beyond the science at hand. "How we talk about humans during this debate may inadvertently change how we look at ourselves," writes Evans.

The question of what defines our humanity was, after all, at the heart of Wells' classic novel. Once Pendrick has escaped the island of Doctor Moreau, he returns to a life of solitude in the English countryside, preferring to spend the lonely nights watching the heavens.

Having witnessed the boundary between species broken so violently, he cannot meet another human being without seeing the beast inside us all. "It seemed that I too was not a reasonable creature, but only an animal tormented with some strange disorder in its brain which sent it to wander alone, like a sheep stricken with gid."

David Robson is BBC Future’s feature writer. He is @d_a_robson on Twitter.

Join over six million BBC Earth fans by liking us on Facebook, or follow us on Twitter and Instagram.

If you liked this story, sign up for the weekly bbc.com features newsletter called "If You Only Read 6 Things This Week". A handpicked selection of stories from BBC Future, Earth, Culture, Capital, Travel and Autos, delivered to your inbox every Friday.