I think, I am on the complete other side of the spectrum.
I don't think so. I see no contradiction between a fictional character being more aware of its fictional environment and a desire for the player to simply be immersed in a world that would exist without him too. In fact, I believe the two ideas support each other!
When we were developing
Drama Princess, we came up with a system for driving autonomous characters through behaviors. One of those behaviors was "being controlled by the player." And when the character was performing this behavior, all its other (autonomous) properties (looking around, sensing objects to interact with, changing mood, etc) were still active.