A Narrativist Sandbox?

Thought experiment: Imagine a sandbox type game with some serious narrativist elements thrown in. What would such a game look like? Would it work? Is Castle Greyhawk still Castle Greyhawk when utterly personal and non-tactical decisions repeatedly come into play?

I've been thinking about this lately because my group has been dabbling in two sorts of games - a savage worlds fantasy sandbox campaign in the old school vein (GM'd by co-blogger Pat), and a more narrativist streak of games like Burning Wheel and a more recently started Spirit of the Century game in Fading Suns space that I've been running. It's also worth mentioning that I've shown up at a couple of Chgowiz's old school fantasy games.

Upon the deepest of reflections, it turns out that I like elements from these various games, and I have problems with these types of games as well. I find "old school" games a little restrictive because the pc's are fairly powerless and every little thing takes so much effort. And while I love true sandboxes as the basic framework for games, I find that these games lack real connections between the characters and the world. Which makes all decisions a player based thing rather than a character based thing.

I find many narrativist games too foofy, for lack of a better word. In my current Spirit of the Century game, the world is so wide open that I'm forced to be a little too heavy handed (for my taste) with plot hooks. But I love how games like Spirit of the Century and Burning Wheel have mechanical repercussions for personal characteristics. For example, in SoTC, a character can have the aspect "disdainful to non-nobles." Pulling this aspect into a roll can give a character a mechanical bonus to do things where this applies (which could be a range of situations). The environment or reaction of the NPCs change accordingly, and voila - a plot starts to appear that's grounded in character sheets.

So, the question is now: Could a fantasy megadungeon fruitfully work with a system like Spirit of the Century? Would the balance of the old school and new school be just right? Or are we really talking about oil and water?