Yes, I've been thinking about the very question for quite a while; my big project, which is on hold, relies heavily on storyline, however I don't want it to be too linear.
For example, if your starting town is invaded and you failed to defend it, you would be kicked out or forced into hiding in underground, where you would continue playing from. The game wouldn't end at all, even if the main character is defeated gruesomely; I'd use the system similar to Left 4 Dead - if it gets too tough for player, lighten up, if it seems too easy, throw some more challenges at him.
From what I have heard, Left 4 Dead is brilliant. Thing is, however, that implementation would be quite a female dog.