The question I just asked myself, after reading what you posted above, is this: How would one 'win' a game like I am trying to envision? What is the objective? Then I thought of CF, and realize there is no way to 'win' CF.
Problem: you created yourself and insoluble question by the choice of question. You need to go deeper into the question of experience.
Why is "winning the game" important?
You'll note that is a very different question than "why is winning important?" We know why winning is important, because success provides gratification, gratification provides pleasure, pleasure is why people play the game. There are other sources of gratification in gameplay, but succeeding at things is a really good one to target.
But why "winning the game?" Is it because having a narrow timescale makes it possible to get more people to buy in to the experience? That's a reasonable point of view. Is it because setting goals and achieving them makes for good breakpoints in storytelling? That's certainly true.
Most traditionally architected role-playing games, tabletop or computer, have a definitionally driven top-down story pressure to "get to the end." It's the kind of thinking that led to "railroading" being such a big deal in the reports of game players. Railroading is just the GM deciding that no matter what happens, the story and the characters goes "this way." It blatantly disenfranchises the decisions of the players. That's exactly, and all, that it does – and why it is such a loathsome technique, because the players really don't have anything else.
But let's go with simulation. There is a lot of discussion around the question of whether simulations constitute games in any case. That lack of closure, that lack of "bringing things to an end," even on a chapter/mission/achievement basis may certainly disqualify them from being seen as games in any traditional sense.
However, custom character development and play acting in a dangerous, war-torn fantasy world with D&D, wargaming, FPS, RTS, or civilization-style direct competition.
The problem is that you are acting at the wrong scale. You want custom character development, which implies that you want a single (or a squad, if were talking about the whole party) character which can make meaningful decisions on a regular basis and have some effect on the world.
That is particularly hard for a videogame, because scalar affects on the functioning of the world which go hand-in-hand with your ability to make decisions in an open world environment don't really come together.
On the tabletop, check out Warrior Heroes which are referred to in my previous reply. The idea is that you create a character who inhabits a place in the world, and the mechanics are geared toward you having adventures, meeting people, getting entangled and things, and adding to your group – making contacts, working your way up. If you pick up Warband, you can continue working your way up from just a guy out fighting against the local constabulary or invaders, making yourself more and more powerful in a real way, pulling in more hangers on, and working your way up to being responsible even as king.
Which reminds me, I need to poke Ed and see if he's going to put Warbands back up on the store.
If D&D had a strategic layer, that would possibly be useful to you in this particular context. But once scale moves beyond your local individual, that character whom you customized and made personal becomes less important – by definition.
It's back to the question of density of important decisions. There is only so much time, and only so many decisions can be made in that given time, so you spend your time developing the part of the game where people will spend their time making decisions. And you have different required decision densities for different kinds of play – and often the twain shall not meet.
This is why you find modern systems making combat mechanics more like the broader resolution methods used in social conflicts, and thus move the rate of decision-making for combat scenes into something closer to social scenes, rather than the other way around – which never worked very well for combat in the first place.
(I have a few more ideas, too, but Life(tm) demands its due. This evening, then.)