What I always feel reticent about in a story game like In a Wicked Age or Blood & Honor or Fiasco or whatever is that I encounter a verisimilitude problem during the game. It's all very well to cede narrative control to different players, and it often results in interesting and enjoyable consequences, but I find it hard to engage with the world as a believable place if everything is contingent and can change at a moment's notice once control of what's happening shifts from one player to another. (Of course, you get a bit of this in any RPG, but it isn't the whole point of the game as it is in, say, Fiasco.)
For example, let's say it has been established that there is a town with a mayor. Okay. Then one of the players decides that the mayor is secretly an alien. Then once that's been established, one of the other players decides that the mayor is a secretly an alien and his wife is an alien hunter who does not know that her husband is an alien. That's the sort of dramatic consequence that you get in certain story games, and I like it, but it only really makes sense as the creation of a narrative, not an exploration of an actual real world. This makes it hard for me to take things seriously, as though they are not actually really happening but are just contingent, notional events subject to radical change at a moment's notice.
What's a way around that problem? Well, I am currently reading The Neverending Story. I read it once a very long time ago, I reckon when I was about 10 or 11, so I can remember very little about it (except the really vivid scene in which a band of flagellants throw themselves into the Nothing, which has always stuck in my mind). I'd always thought of it as being a kind of European version of The Lord of the Rings, but of course it isn't that at all. It's more of a kind of trippy extended metaphor for the imagination, and it's pretty brilliant stuff. (And nothing like the film, although I don't remember much about that either.)
As those of you familiar with the story will know, in the second half of the book Fantastica sort of creates itself out of the wishes of Bastian - it isn't fixed in place at all. Once Bastian has imagined something, it comes into effect and is completely real, but not until then. This gives him a level of control over things, although the world has a strange way of not quite conforming to what he really wants it to be and in a sense perverting it.
I like this - it's a very potent allegory for the human imagination - and I think it's a little bit like the way in which a story game works. You have a world that is slowly created by the players, each of whom has the power to give effect to his or her wishes. But those wishes get perverted and changed by the other players, or the GM, who also act on the world in unexpected ways. Like Bastian, each player has the power to actually affect the world purely through his or her imagination, but, also like Bastian, the world still has the capacity to be completely surprising.
I like this way of thinking about story games and it makes much more sense to me not to think of them as story games, but Neverending Story Games (if you will). In other words, people who make story games have inadvertently made the perfect tool for replicating the fictional world of The Neverending Story and settings like it. Forget all that hippy bollocks about shared narrative and protagonisation and whatnot. No, let's use story games for role playing in worlds in which the PCs, not the players, actually literally have the capacity to affect things with their wishes. Boris the 1st level fighter can actually create a dragon's treasure hoard by wishing it into existence, and Sarah the 2nd level mage can actually wish for the dragon to be absent. It's not Boris and Sarah's players who are doing it, but the actual characters within the fiction. Of course, the GM then gets the chance to say, yes, there may be a dragon's hoard, and the dragon may be absent, but he always leaves his treasure hoard coated with deadly poison when he goes away. (Even better: the PCs make wishes about the world. The GM makes tweaks in response but does not say them out loud - he just writes them on a concealed piece of card that he reveals at an appropriate moment: "Haha, the dragon's hoard is poisoned, fuckers!")
This seems the perfect approach for a campaign - or maybe an interlude in a campaign - which is set in a dream land or a place in which dream logic operates. The players get sucked into Limbo or Pandemonium or the Abyss. There, whatever they imagine gets made real... But the evil nature of the environment cannot easily be escaped...