Welcome, Littggr! I hope you have fun with your 1.7.10 world, and would love to hear what mods you decide on playing with.
I'm testing a batch of mods in 1.7.10 with my daughter right now and so far it's pretty fun. I've added a few mods I'd previously never heard of before and am pretty happy so far.
I'm a fan of anything that makes the vanilla villagers less ... derpy ... (I hate that word, but it kinda fits them when I have to keep rescuing them from the well) and so a few of the mods I've tinkered with recently are Custom NPCs (of course), Better Villages, MoVillages, and Helpful Villagers. The two middle ones try to clean up some of the vanilla placement and make villages a tad less rare, the first requires a bit of work to get going but can blend in pretty well with the City Construction Challenge theme, and the last one, while pretty buggy still, removes the trading aspect of villagers and turns them into farmers, lumberjacks, miners, and pack mules.
If you're into the Cauldron/MCPC+ thing for a server and can use Bukkit-style plugins, Citizens2/Denizens/Sentry are a set of plugins that can also provide some advanced villager-type interactions. I tried fiddling with them for a bit, but there are some incompatibilities with other mods when using MCPC+/Cauldron so I'll probably have to let those drop off my radar for the near term.
Purely for ambiance more than anything else, I've also found that adding WildCaves3 makes mining more visually interesting.
As a general go-to for agricultural variety, I turn to Pam's HarvestCraft by @
MatrexsVigil paired with SpiceOfLife, which provides a compelling reason to become an Iron Chef of Minecraft. Previously I paired it with Hunger Overhaul but I decided I liked SpiceOfLife better.
Pam also has some other mods, two of which I regularly include: Pam's Clay Spawn and Pam's BoneCraft. These have to really be given some careful consideration before adding if you're doing this challenge though, as it most certainly makes some aspects of the game much easier to deal with. For me, it removed some tedium and grinding.
Again, welcome to the thread!