As just about everyone interested in the topic has posted, the game Facade is out and available for general consumption (Jesper has been kind enough to mirror the download as well). The idle thumbs review (which was linked through the slashdot artcile) is actually very good, and confirms what I figured would be the general problems with the application. The text parser sets up the belief that more is possible than actually is, and the drama can't possibly deal with all of them.
I'll save my actual diagnosis until after I've been able to play the "game". It's torrenting right now and I'll probably be able to play it tonight or after I move (meaning Monday or Tuesday), so look for a post then.
Also, I'm planning on putting up a page outlining several of the general assumptions I make when I think about game theory / design. Hopefully that will help people that wants to argue with me, since they can start by arguing the central point, instead of a conclusion.