You've asked for thoughts on the pro's and con's of how D&D as a GM-less endeavor could work. I see the thread has become more of a dissection of the original post. Forgive me for devolving it back to your original intention, but I didn't jump into this thread early enough to avoid it's changes in direction

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Pro's of how D&D as a gm-less endeavor could work:
Theory: It offers a dynamic world created by a coalition of creative minds. Players legitimately attracted to this type of game would pool their resources to create a world and story with (theoretically and assuming 4 players) up to 4x the creative resources as a typical game. (The flaw to that theory is preconceived game worlds can be reviewed and refined while 'on the fly' creativity usually lacks that refinement). Levels, pacing, and mechanical gains are incorporated into the world based on their appropriateness rather than a predefined formula of acquisition.
Practice: Player A describes the village they're approaching and says how much fun she used to have there as a child. There was a giant statue in the courtyard that she used to climb. Something's wrong, what is that? At this point the player defers to player B who describes a creature tearing down the statue. Since D&D is a mechanics based system, the party will need to be careful to select monsters and traps appropriate to the level of the group. Perhaps the level 4 Ogre isn't quite enough so player C says he sees 2 goblins hiding in the grass. Player D sees more goblins, but the village reeve is engaging them and barely holding his own.
Theory: It removes GM insistence on following a specific plot or quest line. It literally strips the single ego out of the game and replaces it with a collective ego. This doesn't mean ego doesn't exist, but it has to be spread evenly among the players for the game to function. Since preconceived ideas of "how to win" are stripped away, it changes the narrative experience (which is separate from the mechanical experience) from describing my journey from point A to point B to simply describing my journey.
Practice: Players would determine their goals instead of being handed a plot or list of things to do. These goals might fit into a larger story that's being built, or it might be a whim of the night. Discussion amongst the players is key. Compromises made here determine everyone's mood at the table and in the game. This is the most 'dangerous' part of this type of game, and to be honest, I'm skeptical that the typical D&D players I've met in my games would thrive in this environment (I'm not implying a lack of ability, but rather a lack of motivation to change the world instead of trying to conquer it).
Theory: It changes the relationship of the people at the table by removing the (sometimes) adversarial nature of 'the party vs. the GM'. You're now all working together to collectively construct your obstacles, overcome adversity, and enrich/create the world you're in. There is no longer an assumed reward for outplaying the GM in combat, or finding the perfect combination of stats/feats.
Practice: Character generation is now more closely tied to the personality you want to play instead of the mechanical aspects of your character. Obstacles are created by the players that focus less on stopping the party through mechanical means and instead offering compelling choices to tackle that obstacle. We rarely question the ethics behind breaking down a locked door in the old temple dungeon. It's there because the GM placed it there, I need a 21 strength check to open it, BAM, treasure, encounter, plot point is provided. Never mind the fact we've now desecrated a temple, especially since any ramifications will happen from the GM who will have to take the ultimate responsibility for the party's actions (in game terms, not in ownership of the actions).
Theory: Players completely own their actions. If things go right or wrong, they can only blame themselves. This removes a layer of passive aggressive playing that I believe (and am making the accusation) most of us have. If we want to do something (like burn down the inn), whatever happens after that is because the GM made it happen. I am forcing the GM's hand by doing what I wanted to do. With this layer gone, I have to judge myself for burning down the inn. Since we're talking ideals right now, we'll assume that appropriate actions in the world are taken by players.
Con's (Most of my con's actually deal with the players not the system. Since I view the system as a tool and not scripture, it's form has less meaning to me than how it's used).
- Players would need to understand the differences between building a world vs. playing in one. I'm not sure I know enough players in my gaming circle to actually put together a party that could do this.
- Unless the party was amazing at working with each other's creative talents, the game world MIGHT become a shadow of itself by simply being a group of collected scenes pasted together by the party. In order to create a world with depth and real substance, the party involved would have to have a lot of skills (I'd hazard to say training).
- Requires a high degree of party cohesion to achieve ANYTHING in game. It only takes one person to change the tone of the game.
- Requires a high degree of trust and respect between the players. If any of the players have real life issues with another player, the chances of having the game disrupted increases greatly compared to a moderated game.
- Requires the players to accept a non-linear path of progression... actually the acceptance that there might NOT BE progression.
- Since levels, items, pacing, etc, are defined at will by the party, it becomes virtually impossible to determine "in X sessions, we should be level Y". This really isn't a con per se, because the nature of the gm-less system makes it a non-issue. Players who like to plan out their characters, though, might find this uncomfortable.
- Players who value the game mechanics as a metric of their success will find themselves with very little 'success'.
- Players with egos will have a miserable time because the game 'isn't about their character'. This is funny in a way because when you take a step back, the game is MORE about them and their input. They might also disrupt the game ?subconsciously? by interfering with other player's creative processes (like diminishing the grandeur of a newly created NPC, or causing minor conflicts in the world with a careless attitude that only applies to other player's created content).
- Since the foundation for the game isn't really laid until the game is played, it becomes virtually impossible for the players to surprise themselves with clever twists in the game. It would be counter-intuitive in this type of game to suddenly have 1 player take ownership of the adventure and say "EVERYTHING YOU'VE DONE HAS BEEN ACCORDING TO NPC A'S PLAN! MUAHAHA". Especially since without a GM directing the party, NPC A's plan would be a quick interpretation of the transpired events in the hope that you could create a reasonable explanation of them.
To sum up my feelings on the pro's and con's of a gm-less D&D game, I'd have to say:
With the right people playing, it could be a very rewarding experience. Unfortunately for me, I don't believe I have access to those people to try something like this. More importantly to me, it doesn't matter what system you add after 'gm-less'. It's a merging of ideologies. Applying narratives and roleplaying to a simulation is the same as asking "What simulation mechanics (4e, shadowrun, etc) are we going to use to handle some of the obstacles in our narrative/roleplaying session.
This excercise is still about two mutually exclusive entities being played at the same time. I believe that roleplaying and simulationism can never exist as a single game. The very nature of a mechanical game limits options and dictates what you need to do to 'win'. True roleplaying has nothing to do with 'winning'. Jim, I'm going to use an example you gave me (horribly mangled, and out of context): I can try and roleplay in monopoly all day long. I can use a funny voice, write down some quirks that I have, but in the end, I'm still just playing monopoly.