I mean, I think it's pretty clear that Sacchan's dad is abusing her, and that he's hinting at roping Mizuki into it; the "this is daddy's penis" bit is Sacchan dealing with things by replicating her abuse.
The final wish is Mizuki's confused summary of the situation — she doesn't want Sacchan's dad involved, she just wants Sacchan, but Sacchan seems to think a penis is necessary, so if there's gonna be one, it should be Sacchan's.
