I have big problem with "gamey" stuff:
At heart, things in DF are supposed to make sense. World that "lives and breathes". It seems that people here want pre-designed campaign style game.
If I know that something is not difficult because it is hard for objective reasons, but because it needs to be hard because of gamey-designery idea of how I am supposed to play, I am pissed because it is not real difficulty, and world was tampered with to make less sense.
Real world will not, for example, scale number of foes attacking your village so that you can kill them off fairly comfortably with small margin for error. If game sends you more or less foes based on difficulty curve settings than there actually are bandits... well, I do not need to play DF for this kind of experience, any other game will do and be more suited for it.
Part of "loosing is fun" derives from fact that real world is not fair and that stuff happening to you is not carefully metered to be beatable, but somethimes simply too much for fort to handle.
First off, I totally know what you mean. Among other things, you don't want a game that tailors itself to you-- that backs off when you're doing poorly and pushes when you're doing well.
But I also think that it's important to realize that this is not an either/or kind of thing. A pure simulation isn't fun; a pure game isn't fun. It's about the balance between the two. Ideally, you have a game that fools you into thinking it's a simulation.
It's important to keep in mind that DF is not simulating anything real. It's simulating fantasy. Yes, we want internally consistent fantasy. But the fact that it's fantasy means that we (erm, Toady, I mean) can tailor the rules of the world to keep it BOTH internally consistent and yet progressively challenging in a, well, let's say gamelike manner.
For instance, let's imagine a brute simulation. You embark. Immediately, seventeen thousand goblins descend on you, because you're pretty much next door. Simulation? Yes. Fun? No.
Or, you're a few hundred miles away. You keep to yourself. Goblins that siege you never come back. Eventually, goblins stop sieging you. Accurate simulation? Yes. Fun? No.
I can totally understand the fear of going too far the other way too. When you kill goblins without casualties, they come back with double, until you start to receive casualties. Gamelike? Yes, it tailors its difficulty to your ability. Fun? No, it makes you feel like you have no impact on the world-- that if you succeed, you'll just get screwed harder, and if you fail, the world will forgive you.
But somewhere, between the two extremes, there's the possibility of making a world such that it is both simulation and game. World generation is a good example of this. Magma sea, adamantine, caverns-- none of these are necessary for simulative purposes. They don't represent anything real. They're pure fantasy. Adjusting the default of how caverns or magma seas operate makes an experience that is both a simulation and a game. It's internally consistent, because the other dwarven civs don't penetrate deeper than cavern 1 anyways, nevermind elves, goblins, or humans. It's fun, because it challenges you progressively, rather than letting you reach the magma in season 2, making you wonder why obsidian is actually worth any more than marble (see, that part of the game is internally inconsistent, as it stands).