I totally agree with the “collective imagining” approach you describe. And the balance between players and GM is an ever changing thing. Without one you can’t have the other, so it definitely is a fine line…

I tend to agree with your analysis but I prefer to think of this in terms of Authority rather than Control. I see games like RPGs more of a collective imagining than a versus event. Every GM has a maximum level of Authority they’re comfortable with giving the players and each Player has a level of Authority they feel is the minimum they’re willing to play under.

There’s a couple interesting things about the Authority in games of this nature. One is that there’s a finite amount that can be “handed out” at the table. The other is that Authority cannot be taken. it has to be granted. So if a GM wants more Authority, he or she has to be granted it from the Players and vice versa. Most gaming groups have some unwritten and often unspoken framework for who has what percentage of the Authority under what circumstances.

When a Player exceeds his or her Authority (from the GM’s viewpoint) they’re not following the story properly/playing their character correctly.
When a GM exceeds his or her Authority (from a Player’s perspective) then the game is on rails.