SHII had a scripted campaign much as you described. It was like playing a First Person Shooter; if you died you started the same level (mission) over. If you didn't fulfill the primary goals you started the level over. There were alternate campaigns created, and they were much better, but the problems still existed.
What the SHIII devs seemed to be aiming for was an expanded version of that. Depending on how well you did you would go to different scenarios; one if you did well, one if you did poorly and one if your performance was adequate. How it would have worked, no one knows. I'm just glad they listened to us when we said we didn't want that.
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“Never do anything you can't take back.”
—Rocky Russo
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