Nice article Dhruin! The way I see it the heart of the matter is that a true RPG should be educational. A successful design should be able to convey characters and situations that are out of the ordinary and that we rarely or never experience in real life. The original Gothic comes to mind; it did an excellent job in exploring the feeling of helplessness of someone thrown into jail, for me that was the game's strongest point. In this respect, what makes a good RPG is no different than what makes a good novel or movie.
Take away this premise and any RPG quickly degenerates to a strategy or action game, according to whether it emphasizes rules or reflex. This is the reason that it takes more than skillful programming and spectacular artwork to create an RPG and this might be the reason that good RPGs are very rare (as are good movies or books).
In fact RPGs take this premise one step further. Not only do they allow experiencing of certain characters and situations, they also allow experimenting with them, thus raising the educational value to an unprecedented degree. What makes 'Silence of the Lambs' so popular if not for the fact that it allows any non-expert to get a glimpse into the criminal mind? Take the following dialogue for instance:
Lecter: First principles, Clarice. Simplicity. Read Marcus Aurelius. Of each particular thing, ask: 'What is it in itself, what is its nature?' What does he do, this man you seek?
Clarice: He kills women.
Lecter: (scolding sharply) No, that is incidental. What is the first and principal thing he does, what needs does he serve by killing?
Clarice: Anger, umm, social acceptance, and umm, sexual frustrations...
Lecter: No! He covets. That is his nature. And how do we begin to covet, Clarice? Do we seek out things to covet? Make an effort to answer now.
Clarice: No, we just...
Lecter: No. We begin by coveting what we see every day. Don't you feel eyes moving over your body, Clarice? And don't your eyes seek out the things you want?
Even if they came out of the mouth of a psychopath, those words left me a bit wiser. Now imagine an RPG with the same setting; allowing you to play with a male as well as a female version of Clarice, various classes, different backgrounds, multiple dialogue options, different endings. The possibilities for exploring the psyches of your avatars seem limitless. Of course this presupposes that the respective material already exists in the game. Now this is exactly where the importance of rules and character generation lies.
Character creation should not be about different ways of killing things, it should be about creating different character types, allowing each avatar -and thus the player through her/him- to experience the game world from a different angle, thus effectively making for different game worlds.
Keeping in mind that all that most players really want when they sit in front of the screen is to equip an axe and start killing 'stuff', it seems that RPGs have a long way to go. In my opinion this is only natural considering this is a very young genre, one might say at its infancy. Pen&paper RPGs have the advantage that they involve real people. Hence it becomes simpler to explore their personalities since they are there in the first place! To transfer the illussion to a computer game is a challenge of a completely different order. But it does have the plus of allowing for the creation of unusual and out of the ordinary characters that we would not be able to 'meet' otherwise.
To conclude, let me say that we live in an age that most human relations are described as being superficial. RPGs might be one of the ways of bridging this gap by enabling us to better understand our fellow humans. Maybe not the best way, but then again, everything is relative.