I've come up with an idea for Dawn in my fanfic so let me know your opinions.
Dawn is Buffy's cousin, her dad is Hank's brother. Joyce and Dawn's mother became very good friends during Joyce's marriage to Hank and that friendship continues after the divorce (but they can't see each other all the time because they live in different states eg Joyce is in Sunnydale whilst Dawn's mother lives in Portland in Oregon). However, Dawn's home life is very much like Xander's (hence why she develops a crush on him because she feels that he "gets" her), Dawn's father is not a nice guy (which is why Joyce never liked him) and is physically abusive to Dawn's mother (though not to Dawn however she does witness the domestic abuse). After a particularly nasty incident, Dawn's mother and Dawn travel down to Sunnydale and take refuge with Joyce for a little while (Joyce was unaware of the domestic violence and encourages Dawn's mother to leave Dawn's dad to which she agrees). Dawn's mother also names Joyce as a legal guardian for Dawn should anything happen to her. A couple of weeks go by, and eventually Dawn and her mother head back to Portland because Dawn has school there). Unfortunately, as is the case with many domestic abuse relationships, Dawn's mother takes her husband back after he promises to change and all is well for a few days but inevitably the abuse starts again. This all happens "off screen".
Joyce gets a call one day and has to urgently travel up to Portland. She doesn't really give a reason to Buffy and Buffy has other things to worry about. A few days later, Joyce returns with Dawn in tow and tells Buffy that Dawn will be living with them from now on. It turns out that Dawn's dad shot her mother in a fit of rage and has been arrested for murder. Since Joyce was named legal guardian, she is now responsible for Dawn.
Buffy is sympathetic at first, however after a while she starts to find Dawn's presence annoying (as she is back in the closet as the slayer) but feels like she can't say anything because of what happened. Dawn's behaviour as a result of what happened is not great, she's kind of defensive and stand offish, maybe blames herself for not stopping what happened (despite there being nothing she could've done), she has a lot of anger that is misdirected at herself and others and it makes her kind of bratty.
Dawn is jealous of Buffy because Buffy seems to have it all- friends, a mother, a boyfriend, confidence, etc. I haven't yet decided on whether or not to make Graham Buffy's half brother from Hank having an earlier affair (since the actors look alike) but Dawn would be jealous of that as well. Since Spike and Joyce have been spending time together watching Passions, Dawn believes Spike is a really nice guy. One evening after an argument with Buffy, Dawn runs out of the house and into the night before Buffy can stop her. Buffy chases after but loses her and has to call the scoobies to form a search party. Joyce isn't happy with Buffy and calls the police to file a missing persons report. Buffy and the scoobies go out to search for Dawn before she ends up getting herself killed. In the meantime, Dawn has wound up in the company of Spike and a chipped Drusilla where Dru makes a comment about Dawn being "all shiny and bright". It's waved off as Dru just being Dru.
Eventually Xander finds Dawn and dislikes Spike referring to Dawn as "Nibblet" (given the fact that Spike is unchipped and Xander thinks it's a veiled threat). Xander returns Dawn home where Buffy berates her for running off and warns her to stay away from Spike and Dru (whilst trying not to reveal the truth about vampires) which annoys Dawn because she can tell Buffy is hiding something from her.
Glory rocks up in town looking for her key and Angel turns up in Sunnydale to assist Buffy with fighting Glory. He brings Darla with him to prevent Wolfram and Heart getting their hands on her. Wesley and Cordelia are holding the fort in LA. Darla wants to be re-sired and thinks she can get Dru to do it but Dru's chip prevents that. Spike point blank refuses so Darla has to enlist Dru to "persuade" him. Spike agrees on condition that he is in charge of the group. Darla agrees but was obviously never going to let things stay that way. Darla sees an opportunity to form a power partnership with Glory. One of Glory's minions who is aged and blind and a little bit mad has the ability to track the key's energy signature which has led them to Sunnydale. However, the minion dies of age. Glory knows her key is a person but doesn't know who (the monks just attached the key to a random person in the world which coincidentally happened to be Dawn). Darla figures out that she could use Dru to help Glory find her key in exchange for Glory helping Darla take control of Sunnydale. However Spike decides that he'd rather Dru spend her time with him just to spite Darla. Dru enjoys the attention. Darla knows she can use Dru for her own ends but has to manipulate Dru into manipulating Spike just to keep him out of the way.
Darla takes Dru for some bonding sessions eg shopping and to the cinema so that Dru is more likely to listen to her. It seems to work and Darla decides to introduce Dru to Glory (Dru isn't old the full story, just that Glory is a "friend" and is looking for a lost item). She tells Dru that she can't say anything to Spike as it's their "secret". Of course with Dru being Dru, when Spike asks her conversationally what she got up to whilst she was out, she replies "Shhh, it's a secret" which piques his interest. He then convinces her to tell him which she does.
Darla is angry with Dru for telling Spike about Glory as Spike is now suspicious of what she's up to. Ordering Dru to spend as much time with Spike as possible so that he loses interest in Darla's plan, Darla employs a new tactic. She goes to Angel and tells him that she wants to redeem herself, that being a vampire isn't as fun as she remembered. Angel is sceptical at first but is lured by the idea that if Darla can achieve redemption then she can help Dru achieve redemption too. Angel deeply regrets what he did to Dru so he feels that helping Dru will absolve him of some of his guilt. Darla makes sure to keep Angel and Sprusilla apart since if Angel goes in talking about redemption then Spike is likely to spill the beans on what's really going on. Darla uses her "redemption" attempt to get close to Angel, not only to find out what he and the scoobies know about the key, but also with the intention of turning him back into Angelus. Buffy isn't keen on Darla's presence.
Darla arranges secret meetings with Glory where she updates Glory on her progress. Glory is getting fed up of waiting for results but Darla promises she'll have something soon. Meanwhile Glory has beaten up a demon which allows Darla to take over that demon's territory in Sunnydale. It's small but its a start and comes with the demon's lackeys. New of this spreads round the demon community and Clem informs Spike of this which again raises his suspicions. He wonders what Darla is getting Dru involved in.
Angel and Buffy start getting close again platonically which worries the scoobies and irritates Darla. She seeks out Glory. The two women have actually begun to develop a friendship and spend the evening drinking wine and complaining about their problems. On her way back to the crypt, she sees Dawn wandering the streets (having climbed out the bedroom window unnoticed) and being trailed by another vampire. Darla lets him get close enough to attack Dawn before fighting him off. Dawn is grateful and Darla takes her back to the crypt, making Dawn feel like she can trust her. Dru makes another comment about Dawn and Darla suspects that Dawn is the key. Spike ask Dru to elaborate but Darla interrupts and changes the subject. She waits an hour before telling Dawn she'll walk her home. Darla say she has to visit a friend first and takes Dawn with her. Darla talks privately with Glory and tells her that she suspects Dawn is the key. Glory is pleased by this. However, she can't use Dawn just yet and tells Darla to keep an eye on her until the time is right.
That's all I've got so far.