Really the games are only story-driven because you think that a video game story should put you in absolute control of a/the characters' actions to be character driven. Plot-wise, most video games are character driven, just not in the sense that you are the end all of the characters' decisions. They are pre-produced characters that have their own history, motives, and personalities, you just aren't able to influence them really. The only real way that a story can be character-driven (in the sense I am led to believe you consider character-driven stories to be based on your own definition) is for there to be a human on the other end acting as game-master, controlling non-character controlled elements of the game. The definition you gave me is more like player-driven story, which, I'm sure, is what you meant to say, and that can be acomplished like...
>Created a logic system wherein you would be given a specific setting, and the ability to create one or multiple characters, produce a backstory >from a given set of events, and control them in the world, with each other important character having some semi-advanced AI applied to them, >and the majority of the random NPC's would have some more watered down react-to-circumstances AI, some initial story setup, and then throw >you out into the world, with accomplishing certain things giving you an ending or the option of finishing.
And most of the time games aren't trying to cheat you out of character agency (and the whole game is generally character-driven, rather than player-driven again), it is just that it isn't very condusive to have a murderously complex player-controlled freeform game for everything. It takes away from the game design elements in that they have to severly cut back on the amount of general story is put into a game, they have to have enemies that would make sense in any situation, and they would react appropriately to your choices.
And choices don't create a better actor most of the time, because the one who you are chosing for is almost always (like I said before) some blank-faced doll who runs around when you tell him to (well, that is the point of a game, but whatever), and does what you tell him to. I am interested in seeing how well Mass Effect is done though, because as far as I am led to believe it will be a well done version of a player-driven game, rather than one where all the characters have little care for what you do (e.g.- I played the good little boy in KoTOR 2 and no matter how good I acted HK-47, Mandalore, and that floating drone only complained a little, even though they should have been like, "You're dumb, bye,"). Then again, that example really only applies if you thought that KoTOR was well done, otherwise it was pointless.
I think I forgot one or two things, but oh well...