Guy Jackson said:
Ultimately in the development of the game two things were decided. These two things were determined to be the "Bioshock" experience and needed to be a part of the game if it were to carry the Bioshock name.
1) Exploring a rich detailed unique environment. First game it was Rapture, this time it is Columbia.
2) It needed to be and action game (FPS) with the fast paced combat and cool powers to use.
These were the things on the table at ground level. You would be partially correct in that violence was there at the beginning and is a big part of the game going forward in its development.
Also your assessment of the AAA games is accurate to a point, but not regarding Irrational Games. You see, there is a unique situation with them. The Creative Director also happens to be the lead writer. Levine wrote 90% of the dialogue in the original Bioshock and he likely did close to that this time around. This is not like other games where outside writers are hired and ordered to write the story completely around the game design. Levine has said repeatedly that they cut large portions of the game because they did not fit in with the story they wanted to tell. No doubt at least some of these segments were action heavy and would have provided excellent gameplay, but they were cut. At many other AAA studios the reverse would happen, the project lead might attempt to keep those segments and the writers would be told to write around it. (Many believe this to be what happened in the Dragon Age games, but that is neither here nor there.)
There is always a give and take as you said with Elizabeth. But her inclusion in the game was to enhance the story experience first, and ultimately she did not get cut. Irrational does not go out seeking to just create a violent game. They were interested in a period piece, and this period happened to be violent. 1912 is just two years before that start of WWI. Technology was about to unleash a level of violence up humanity of which the world has never seen, so it is included in the game because that is an important aspect of the time and ties in with the action they needed.