I'm getting tired of this discussion. Can we move on, now? All of this hulllaballoo boils down to the equivalent of "what if we made a roleplaying game without levels?!?"
Of course you can make a game without player characters. But taking something out does not create a game, and we can't really comment on what effect that now-missing element has when we don't know what's going in in its place, or what other elements will be there in its absence.
What do GURPS, Lacuna, Dogs in the Vineyard, and Shadow of Yesterday have in common? Answer: They have no levels. Can we really say anything worthwhile about all of these games? Not really. So can we stop wanking off about games that have no PCs?
-- Josh, grumpy today.