Dwarf Fortress manages to build some really interesting little stories based on a good simulation reacting to pawns with fairly limited actions and internal state (they are wildly deep for procedurally generated video game characters but obviously nothing compared to an actual well-written book character or something like that). Rimworld has even more simplistic pawns and a worse simulation (I’ve even noticed pawns come in with essentially incompatible backstories), but it isn’t a disaster.
The stakes aren’t all that high, people are just really forgiving to the narrator in some genres.
Folks really just aren’t going to engage in it
FWIW, after bouncing the idea back and forth a bit, I’m more hopeful than ever, so even though I wasn’t able to convince you, I hope you enjoyed it as well!
If nothing else, the potential is really interesting. Who knows what will happen. Maybe somebody will come up with an LLM enhanced version of the director AI for Left 4 Dead or something.