This is interesting. I hadn't thought of dealing with conflicting ideals as violating the character concept, but I can see now how somebody might look at it that way. You want it both ways, but you can't have it both ways!
I think one of, maybe THE, major difference between what you see in narrative games and what you see in games that focus on situation/setting/meta-plot is that in the former the NATURE of the character is the crux of the game. In games of the later sort this is never a fundamental issue. Instead the issues focus on the external life of the character, what they do, what physically happens to them, etc. So you see, for example, a 5e D&D character, which is pretty much a fixed thing. Even if you actually do something with BIFTs, you have a class, you have those character traits, and nothing really changes. You get basically one chance to further define your character at 3rd level, and that's pretty much it. The mechanics of what and how you affect the external world is what the game is all about. Its not that some sort of changes are forbidden, nor that they never happen, they simply aren't relevant to anything that the game deals with.
OTOH, while we haven't played Stonetop yet, it is VERY clear that who each character is, in a larger internal sense, how they think about the world, about Stonetop (the town), each other, and their own character abilities, is going to be pretty important. Even if you play in a pretty shallow way WRT your character's personality and such, you will at least have to face up to the implications of your character's actions WRT Stonetop! Every character is highly connected to the community and if you were to just play your character like a D&D adventurer taking treasure and power for themselves, etc. I am pretty sure that will create some pressures on you. Likewise any other way you portray your character, and things like your instinct is going to actually do stuff in game.
Further developing my theme from earlier posts, I think this represents 2 distinct ways a game can be 'character driven'. A sandbox D&D game is, for instance, character driven in that the PCs make all the decisions. Where do we go? What dungeon do we loot? Do we kill the dragon, or open the Forbidden Gate? And that may evolve into "I built a castle, I tamed the lands, I killed off the evil giants" etc. The GM may even be making up some of this stuff specifically to aim it at these PCs. OTOH, while that element exists to a degree in, say, Blades in the Dark, a lot of what the game is about is "what is the cost of this vice I have?" or "Do I kill my friends to get ahead?" etc. which are all fundamentally internal to the character. BitD can be played by people that largely ignore the internal, and D&D can be played by players who spend half their time dealing with their PC's internal demons or whatever. Its just more about how the game is focused, and that impacts the sorts of techniques, like PREP that we are going to want to use, and how we are going to want to use them.