Covenant fanfiction is a weird comparison. CRPGs that let you make narrative choices are trying to approximate the feeling of playing pen and paper RPGs that theoretically let you do anything.
The narrative choices that you can actually make are very limited, though. I appreciate the freedom of P&P RPGs, as it can make for pretty cool and unexpected experiences. Look at this story about a D&D group who abandoned their quest to focus on founding a Morgan Enterprises style empire built on selling massive quantities of salt (
https://1d4chan.org/wiki/Tale_of_an_Industrious_Rogue,_Part_I), for example. That stuff's awesome. It became its own real adventure, with twists and turns and challenges. But we're decades from anything like that level of depth and complexity being possible in CRPGs.
Honestly, I don't think we've progressed significantly past MMVII (1999!) where you choose Light or Dark and can only use the type of magic of the side you chose. Everything else is just window dressing. Rather than the last quest being to go to map X and kill Flobius Zentrume, you have to go to map Y and hack Hrathi Beardsson's magic iPod instead, and then you get a blue ending instead of a green ending. Neat, but... so what?
I mean, what's the ultimate goal? What are you expecting 'great' C&C to be? If your RPG is about you being a bodyguard to a young heiress, but you decide to sack it off and go fishing instead, should the game become something more like Sega Bass Fishing, or Rune Factory/Harvest Moon? If you and the heiress decide to stop investigating the huge conspiracy against her and just go live under fake identities in backwoods Florida, should it become a dating game where the two of you slowly fall in love?
Or do you just want those options to be available, but if you take them you get a couple of lines of 'But that's... another story' and a faux-ending? Because that's shallow as fuck; it's purely the illusion of choice.
If anything, I think that what a lot of people claim to want is directly contradictory. The more focus there is on narrative, the less C&C there can possibly be. The more reaction there is to your unexpected decisions, the more development time grows until it quickly becomes unreasonable. Every path you add has its own branches that just increase the possibilities until you start arbitrarily limiting them. Ultimately, the requirements of the Consequences make the Choices unfeasible.
Say I kill a king's advisor, a friendly NPC I wasn't expected to kill. Nowadays, that just means I'm arrested and I have to pay a fine or I just get killed by the guards. But in this theoretical ultimate C&C RPG, I can run my own trial. I can use my vast gold resources to hire top-notch legal representation. I choose one of a number of lawyers to head my team. I naturally pick the one with the biggest tits. Then I choose to seduce my lawyer through a complicated romance path. As we're nearing the culmination of the trial I choose to cheat on her with a dwarven prison guard who offers to polish my axehead. If my lawyer finds out, she tanks my trial on purpose and I go to jail. Luckily, she doesn't; I'm free. As I'm standing on the steps of the courthouse giving my triumphant speech, I chop her head off, killing her in front of everyone. I'm arrested again. Do the same crew of top-notch legal representatives offer their services to me after what happened to my previous counsel? Will even more gold work to convince them despite their better judgement? Would the fact that I'm the destined Marked hero who is the only one that can defeat the Superdragon work as an indefinite Get-Out-Of-Jail-Free card?
The above is ridiculous, obviously, but my intention is to argue that any degree of freedom offered in a narrative-driven game is by its nature both arbitrary and limited. I'm not saying it doesn't exist, but that it will forever be a poor fascimile of either the freedom you'd get in P&P or the narrative you'd get in an actual decent book. A sprinkle of it can be a nice addition, like salt on your meal, but focusing on it to the detriment of important gameplay elements is a fool's errand.
If you really want to evoke the feeling of pen and paper RPGs that let you do anything, perhaps a better genre to look at would be sandbox games like Cataclysm: Dark Days Ahead. There's less narrative, but the freedom is there, and it doesn't suddenly vanish at an arbitrary point. But then, with barely any consequences, how much is that freedom worth?