in the year 2009, i definitely want a game to penalize me on a regular basis
See I don't get this straw man, it's come up a number of times when I've discussed this with people. People have this idea of a false dichotomy between retarded easy (games with easily found "win buttons" like Fallout 3's VATS and Soul Caliber IV's throws) and retarded hard (
Syobon Action, the bosses in Ninja Gaiden Black). There are many mushy middles that are preferable to the both of them. You can have games that are frustrating and difficult but surmountable given practice and timing (old platformers come to mind, Mega Man, etc) or games that are difficult but reward creative thinking / playing (Half-Life does this very well, and tactical combat games practically require forethought when fighting, fucking Braid) Overcoming challenges is ultimately more rewarding. Somehow gamers (most of whom don't seem to have had much experience prior to Halo, for some reason) got it into their heads that not being able to Rambo all the way through an FPS with no hiccups in one sitting indicates a "penalizing" design philosophy. It doesn't. A penalizing design philosophy makes winning practically impossible outside of very specific and arbitrary circumstances. Some JRPGs reportedly have this problem, although I've never played any.
It would be difficult, I think, to alter VATS and in doing so really harm the gameplay of Fallout 3 irrevocably. In Lucasarts'
Indiana Jones and the Fate of Atlantis there were fistfights in which you could use a "sucker punch" that would effectively bypass combat. VATS is like that. It increases damage (and accuracy, in most cases) and makes the player impervious to harm during its duration, even from explosives. In a puzzle game like Indy it's useful and even necessary. In a dungeon hack game like F3 it's hilariously overpowered.
Which isn't to say that every game ought to be hard. A lot of times my first throughs of games are on easy, so that I can absorb narrative in the least amount of time possible. But unless your game is a kids game you gotta challenge the people, somehow.