I remotely understand your point, but isn't this comparable to a TV show, or some novel series, with constant twists and all, which are somehow done in a way that you rather distance yourself from the story and don't take any sh*t anymore, rather than getting excited and sucked in?
Depends on the manner/quality of how it's done, imo, not on the medium. After all, in a movie, you also identify with characters, rather than just observing.
Your character was a Cypherite and had the ultimate dream to be reinserted? He/she thought it was a self-evident reality that it was a possible procedure or the source he/she had the information confirming that was reliable? Well, TOUGH. Your world got crushed in pieces, see how you do with that. Or, maybe Grey lied and it's actually possible? AWWW, what to do??? Maybe there's hope after all?
Do you want to strive to see through the cobwebs of deception and see the real truth?
Oh wait, to hell with that - you won't let the authorities lie around with you - you become bitter and numb, stop giving a *CENSORED* and just feel like randomly shooting people who look at you in a wrong way (or just like that).

Just an example, of course. I never got into RPing, but I would find playing a character in such a world rather interesting. Then again, I see how MxO doesn't give players influence and all, so I can't really argue with you on this particular case.
As for the other:
I believe even Rarebit said something to the effect of "I would prefer doing without the level system".
Not saying that you can't build it within the RP, but come on - levelling your toon by doing the same kills and missions over and over again, that gives soo much "experience" that for some reason, your strikes are stronger and take more health points than those who have done less of that monotonous activity and thus have a weaker "level" of "experience" - and of course, it expires at 50, whether you acknowledge the number as such or not: when you've done enough of the same boring mission enough times, which somehow gives almost as much life experience as actually challenging yourself with more difficult and versatile tasks that actually require you to listen to what the controller is telling you, and equally increase all your areas of expertise even if all you do is pick locks, sneak OR fight, you've reached the zenith of wisdom and, apart from acquiring clothes or weapons that give you "bonuses" or share your life experience with the "abilities" you bought from vendors" by clicking on the "+" button, you can't go any further beyond the horizon, because, get this, this is the horizon... ??
I might be overdoing a little, but my point is, it's simply a game mechanic that may be ignored or artificially built into the RP. There could be other ways of collecting skills or "experience", as a gamer and as a toon, like finding unique software in the Matrix underground, gaining abilities while performing tasks, getting smarter "yourself"... whatever, I'm bad at ideas, but anything more realistic and organic than increasing the "number" of your "level".
This might seem off-topic, but imagine this: with no EJP, you could die off at any point, after having "grinded" your way to a certain level. I this really desirable? The whole grinding system of such a game stands in the way of the vision of a realistic, threatenin environment where you could die off any minute. That would be cool with "just a character", but not with one you've grinded to the top for gaming purposes.
But this is a typical MMORPG, so EJP and all that stuff are inherently mandatory. Do they distance the player from the War and all? Sure, but that's how it works.
I've always wanted to say that 
....
Now I've ruined my own topic. Oh well.