Interestingly, for me I think the in-character/first-person bit is the false dichotomy, at least with what I've observed. I've seen several players (and honestly entire groups) spend a lot of time 'roleplaying' in that they engage strongly at the 'what this character knows/feels/is-motivated-by' level, but not do so in first person/saying what the character says. Lot of "I ask the shopkeeper about getting my doublet embossed," or "my character is saving up to buy his momma a house with glass windows and (given what we did to the last town) a fireproof roof," but not a lot of in-character speaking. It might have something to do with ones comfort 'performing' -- as in, did you do any acting in high school, etc.? Other players will state out the words their characters say, but always framed with "I/my character says, '[statement]' " (or sometimes "my character goes, '[statement]' ").