I always remember how much passion there was in creating the kick off titles, Chris Sawyers Rollers Coaster Tycoon and Geoff Crammonds F1 games. I’m not sure you can get that in an in-house situation with zillions if producers and managers making decisions for you, even with a 40 hour week limit.
I think, as you pointed out, that strong game design is the key, but for me that would have to come from one brilliant person and that person needs to inspire his staff to create their game. I would hedge my bets that given a 40 hour week limt in that situation many of his/her employees would work longer hours by their own free will.
OK, you probably noticed I know nothing about being in-house but thats the impression I get from the outside coupled with my expererience of working with the likes of yourself and other solo designer/programmers.
I look back on my life in crunch fondly, but there was only so much unpaid OT and food allowance I could take before I ran away to let my creative passions take flight elsewhere. Despite this, I miss working at a dev and eagerly want to return albeit with my own funds to make my own game.