This terrain system seems like it generates a "playing board" - with the players ("sides") already determined.A possible alternative to map-and-key as described in the OP, and possibly somewhat resembling the way "best interests" are generated in IAWA, at least structurally, can be found in the "Terrain Selection" system from Chainmail which forms the rules for combat of D&D (1974). Here's the system in its entirety:
TERRAIN SELECTIONOften it becomes difficult to devise new terrain for a battle, and we have found the following system to be useful:A. On a number of 3" x 5" index cards draw the following:1. Two with rivers2. One with a marsh3. One with a pond4. One with a gulley5. Two with woods6. One with rough ground7. Four with variously shaped hills8. Eight blanksB. Each opponent draws up to four times:1. The weaker or defending side draws first.2. Terrain is placed anywhere on the table at the drawing player's option.
I think a system like this can be applied more generally, not just to the introduction of battlefield terrain on a literal map but to randomly generated content in general, as something to be introduced by all players rather than the GM only. I'm thinking specifically of random dungeon generation as well as random encounters.
Have you used it in a version/variant that will establish latent scenes/situations?