In games that are rich enough to have stories, there's basically a continuum of player agency inside a story. At one pole are the choose-your-adventure scripts, where the player simply picks the next plot point that was pre-written by the storyteller. And at the other end are Will Wright's "software toys," where all storytelling power is abdicated to the player.
Somewhere between these two alternatives are the big games like Half-Life 2 and Deus Ex and Grand Theft Auto. In these games there is a specific story written by the game's developer from which the player may not deviate short of simply abandoning the game. But in between each of the predetermined plot points, players are pretty much free to do as they please -- wander around, break stuff, play mini-games, take NPC missions, solve puzzles -- whatever they like within the constraints of the game. Warren Spector has made a career out of producing games like these, and is still doing so at his new Junction Point gig, because people seem to like this middle way that offers both a compelling literary experience (a well-crafted story) and exploratory freedom.
(Also, Chris Crawford has been working on something like this for years now. Storytron is the latest product based on Crawford's work that offers some interesting possibilities in player storytelling.)
Is this freedom an illusion? If you're thinking only of the main story, then yes -- you the player are on rails. But what about in between the plot points? Is the freedom inside a "sandbox" game like GTA also illusory?
Here's what I wonder: Is there a sweet spot between the literary game like a Deus Ex or BioShock (or Half-Life) and the software toy like The Sims or Spore? Is there any way to let players tell more of their own stories, to create their own literary content, while still supporting the story the professional writers at the game development studio are trying to tell?
In other words, is player storytelling incompatible with developer storytelling?
Is this merely a technical problem that can be solved with (say) faster computers and better AI/graphics/sound? Or is it a fundamental limitation of literary entertainment that there is room for only one storyteller in a game, period?
Should the player who despite everything chooses to trust an unreliable narrator be able to discover -- or create -- his own emotionally satisfying story in the same game as the player who decides he's been betrayed and goes looking for some heads to bust?
Would that still be the "same" game?