I would have liked to see a European/American/Western-style game, told in Western terms, describing a world of Western culture. Nothing against Japan, but... obviously, it's been done before. I've never seen an anime set in America or Europe - I mean, accurately. The Japanese stereotype America and Europe, too, you know.
It would have been nice to see an anime withing the West, that accurately reflected the West.
But it's just a preference, I guess.
Well, visual novels aside, have you tried western "manga?" There are a number of comic book artists who draw their comic in a style influenced greatly by Japanese manga. It can work, to some extent, but there are a number of problems that tend to pop up.
The first problem is one that KS overcame: creating character art of high enough quality that it doesn't look like a pale imitation of what Japan has mastered. But they're not the only people to replicate the manga art style in a way that feels natural. I have read several western comics that take place in western settings despite the Japanese art style.
Sometimes it feels right, but all too often, it feels like an awkward imitation.
Here's an example of a comic I used to read which employs a pseudo-manga style of artwork:
== Jackie's Fridge ==
The art is decent, but the imitation of Japanese trends just feels so deliberate
... and it looks all the more forced because the style didn't come from the culture which it represents. Generally, I think artists who seek a sort of "style fusion" are much more successful, as they end up with something which, if not totally original, at least feels a little more personalized.
On the other hand here are two examples of comic artists treading outside of their culture of origin. The two are polar opposites, in some ways:
== Sparking Generation Valkyrie Yuuki ==
A comic about a Japanese student who becomes a "magical girl" superheroine with powers based on Norse mythology. Having a Japanese student with English dialog interacting with Norse mythological figures ends up being extremely awkward. What's more, the author obviously didn't know enough about Japanese daily life, and ended up shoehorning the story into a non-existant private school with a western-ish name.
Then we have this comic, which is very nearly the exact opposite of the above scenario:
== Tsunami Channel ==
It's a Japanese online comic drawn and written by a Japanese artist, and set in Japan... what makes it unique, though, is that it's all written in English. The artist tries really hard, but there are just too many Japanese jokes that simply don't translate into English, and some of the conventional plot devices of this kind of comic strip end up feeling really weird
when read in English, in my opinion.
So anyway, I don't see anything wrong with using manga-style art for a game in a western setting, but the more elaborately you overlap your styles, the more difficult it is to make it all work together. It's like trying to incorporate ramen and sushi into a meal of stew and biscuits. It's just a tough
thing to pull off
Now, as for Katawa Shoujo, it had the distinctions of 1. being based on a concept and character art created by a Japanese artist, and 2. being created by a team comprised of people from around the globe. Interest in Japanese pop culture was probably one of the unifying factors in a relatively diverse crowd. (Of course, you can always ask them about that yourself if you get the chance.) So that may be one of the rare characteristics that allowed it to succeed, and to feel so earnest.
Right now, Katawa Shoujo is the most successful non-Japanese portrayal of an anime/manga-style story set in Japan that I have seen so far. They really, really did their homework, and it shows. They identified dozens of pitfalls they could have fallen into, and put together many different ways to navigate the minefield and avoid nearly all of the awkwardness. I'm impressed that a trip to Japan was part of the development, but I'm also satisfied that they took the time to understand it as well as possible. (It makes me really curious how many of the developers are functionally fluent in Japanese, actually...)