Wow! Thank you for taking the time to write this! I'll admit, we were torn as a team as to whether we should let the player get lost. Originally, the world was a quarter the size it is now and I rebuilt it on that basis. I even made spaces to reward the player for wondering off course. Nothing especially exciting as we didn't have time for additional programming but we are likely to do more with this project so I will definitely bare that in mind.
I am playing Resident Evil 4 as we speak which is a weird horror/action crossover. I think they nailed the blend of limited resources and satisfactory zombie killing. I'll pass your response on to the others in my team and we will hopefully use it to focus the games genre.