TG: Regarding characters: Well, the designers do make a roster of characters and the same applies for an RPG. Even if the all characters were randomly generated, I would still say the designers are the ones creating the characters.
The way I see it, the only way the players can be the artist in this sense is if they have a character creation menu for all major characters of the game, or if they write the algorithms that control the random generation.
Regarding player as story teller: If I get you correctly, and speaking in P&P RPG terms, then your goal would be for the player to become the dungeon master? Instead, I think that the role of dungeon master should be the computer, that is what I consider the goal of the interactive storytelling.
Examining the brain state would be really interesting, btw. I wonder if these kinds of processes are not too complex for current tech though. But nonetheless, would be interesting to see what areas fire up. Might give some good hints.
More on making art: Another thing that I have against the player as artist thing, that I probably have not taken up, is that the state an artist is in when creating art is not something that I see as goal for how I want players to experience the game.
Creating a piece of art is often struggle, and, more often than not, it is quite boring and monotonous. It means doing something that you are not quite sure is possible, whether it is due to your skills or just technical or physical limitations. It is quite common that your imagined goal is not possible to attain.
The experience of viewing art is not like this, and nor do I want it to be. I want it to be a fluent experience, not necessarily fun and exciting all the time, but it should not be grueling monotone work. I also want to set up the experience in such a way that I know it is possible, and know that most will, be able to receive its fullness.
Striving for the player to be an artist seems to me like it goes against how I want games to be played.
Sure, one can say that the player should be an artist but that it should still be a fluent, well-defined experienced. That I see as trying to have the cake and eating it.
Been thinking ... and me saying that a player needs to create the characters in order to be an artist is not correct. You can have a pre-made set characters, environment, etc and still be an artistic storyteller.
The whole difference lies in how the story comes about. For the player there is a flow, gets event thrown at him/her and he/she acts as if inside the virtual world. The goal of the player is to become immersed. An artistic storyteller does often not have a fluent experience when creating, he makes up events and "acts" depending on what is best for the narrative.