A GM having a "story" inherently limits player empowerment isn't it? It implies player agency must be constrained to items that fit within that framework that reflects the story being told. So while a valid style for DMing, not the best choice for maximising player empowerment.
I'm not a big fan of the GM having a story. As I posted upthread (I think - some of these threads run together in my memory!) I'm an orthodox Forge-ite when it comes to the GM suspending the action resolution mechanics in the so-called "interests of the story" ie I'm against it.
Well, again, this is by permission of the GM. The GM should say "yes" to giving players things (within advice guidelines); the GM can use these guidelines (since they're not the rules of how hard tasks are) if he wants to allow all PCs to be able to complete a task. The things you named are essentially "here's how to be nice to your players for this style of play," not so much "here, players, have some abilities that allow you to affect the story in a reliable manner" like daily abilities are.
<snip>
Does it particularly empower the player? Not without GM permission, which I don't find inherently empowering.
<snip>
while there's always a place for that in an RPG, it's not particularly good at granting "player agency" in my opinion.
I find it somewhat amusing and ironic to find myself characterised as a "mother may I" GM! (That's not a criticism of you. That's an attempt to communicate the fact that I'm sitting here laughing at myself and the situation.)
I'll say more about DC-setting, genre logic and player agency below.
Genre-logic could be used to construct the objective DC, couldn't it? That way the two should be in conflict only rarely. For example, in a wuxia genre game, balancing on the top if bamboo poles is something relatively easy so the Balance DC should be 15 -- within reach of a 1st level character and impossible to fail for a 10th level character who cares about balance. The GM can present the objective DCs for his campaign up front. This helps the players understand the style of campaign and helps them chart a trajectory for the character.
This is one way of going. I think I prefer my way.
I can think of at least two ways of doing genre logic and DC setting.
One combines Nagol and JC's suggested approaches: objective DCs defined upfront, the GM describes the situation, the players choose their PCs' actions.
The other is the approach I use in 4e, which reads 4e in the spirit of HeroQuest revised (and feels affirmed in that reading by the fact that Robin Laws cribbed extensive sections of HQrev into the 4e DMG2). The GM describes the situation, the players describe their PC actions, in cases where they seem particularly gonzo or wacky (like the "hands in forge" example) they look to the GM for permission. In all situations in which the GM says yes, DCs are set using level-scaling guidelines.
I think the second approach more strongly involves the players in pushing the boundaries of situations, mutually defining what is permitted within the "genre logic" context, etc. Nothing is per se off limits, and if they want to push the boundaries of what has happened before in play, or what the rulebooks suggest (eg the list of stunts included in the Essentials skill descriptions), they only have to talk it through with the GM. Possibilities in play are open-ended, and the comparitive simplicity of the resolution mechanics (a single roll against a level-appropriate DC) tends to prevent "probabibility traps" of the sort [MENTION=43019]keterys[/MENTION] mentioned from arising.
Burning Wheel has more definite genre (and genre limitations) built in to the mechanics, and uses different techniques to get the players involved in the pushing-and-shaping stuff (Wises, Circles, relationships, etc).
These are different techniques for supporting player agency, and reducing the domination of the GM over the content of the fiction that arises out of play.
