The book isn't particularly clear on exactly what David did, and of course David lies, but based on his various speeches, which are more or less the same as in the movie but with more, and sometimes new, details, David was indeed experimenting, cross breeding and so on. He seems to have imagined himself drawing out the best of the pathogen. But he does say:
“Would that I could create something so perfect in its function,” he added. “I try, but I don’t have thousands of years of practice at biological and genetic engineering. I have only my pitiable programming on which to draw. That, and ten years of earnest effort on my own behalf. I have learned only a little, yet I soldier on, hoping always to achieve something like this, always striving to do better, to improve. That’s what the Engineers did, I suppose. That is what someone playing God should do.”
My own understanding finds that David was acting as a host. Whereas a human (or any other item of fauna) would provide dna and a warm squishy environment for one iteration of pathogen's imperatives, David managed a whole world-wide (or as near to world-wide as was possible) chain of iterations.
And as it happened, among his bestiary, and not shown in the movie:
Oram found himself filing past a row of tall, menacing bipeds. Their tough exoskeletons gleamed like black steel. Though there were slight individual variations, all had in common the same threatening aspect—long tails ending in scorpion-like points, curving elongated skulls devoid of visible eyes, and jaws filled with teeth shining like chromed chisels.
The movie only shows the weird pale deformed versions. In the book, those come after these more properly "Alien" forms in david's display.
Everything is based on the "parasites" David discovers as having come from the egg sacs. (I still don't know what that means - which egg sacs? Which eggs? It's not at all clear.) They're in the movie too. Those black dots that come, seemingly, out of plants to infect the first two red shirts. In the book, and in the movie, David has them preserved in amber in their various development stages. So, the book might be making things up, trying to preserve a legacy that Ridley Scott was trying to undo, but the book seems to fit over the top of the movie version quite well, adding detail rather than subtracting. And the idea of David as glorified host rather than Engineer-equal seems suitably gothic Romantic.
In any case, there does need to be another movie, if only to find out whether or not we're truly heading down the gothic horror path or this is just a detour in a larger industrial horror story. One may well accept the former, indeed eventually come to acknowledge its beauty even as the outward appearance disturbs, but from the first movie the Alien legacy has been the latter, so........