I've completed the game, but even I have to admit that the funeral fetch quests destroyed all my emotional momentum. At least you know, if I actually had to kill somethings for the materials, that would literally add more 'game' to the whole experience. Not exactly peaceful, but a lot less tedious and far more interesting =/
I don't think the 'heavy-handedness' as you call it is a Japanese thing. It's simply a directorial choice. I've seen plenty of Western media which go for the same overtly dramatic paunch, except for some reason, it becomes even cheesier. Likewise, while Western style direction can be subtle, it's hard for JRPGs simply because it's entire structure is basically stylized. When something has become stylized, it's hard for it to NOT be dramatic as a result, because it's entire design was to over-emphasize certain areas from the get-go.
The only alternative would be to go the Persona route; stylized to the extreme, with a completely unabashedly 'extreme' presentation. Shooting yourself in the head to gain demons, anyone? Done for the shock value, but brimming with the symbolism. Persona is my personal benchmark for JRPG story-telling where the inherent metaphorical roots of the culture of the creators (Kabuki theatre) where symbolism is both subtle and dramatic melds wonderfully with modern themes and story-telling.
That said, I don't knock Lost Odyssey for what it is, and in fact I'm glad it still fits that classic JRPG mold while at least, taking its drama to some new themes. Simply put though, it could have gone further, it could have been done better, but it's still not bad.
I do however, simply prefer watching the LO cast over the teen-bops in other JRPGs (except maybe for Persona). I was so sick and tired of 'sexual tension' because of raging hormones being not just a peripheral thing, but A CORE SUBJECT, that it just turned me off completely. It was just...gross...there's no other word for it.
That, and I didn't want to keep seeing clear pop-culture references in the main chars. Squall was Gackt, and in my head, Squall was hence bisexual but with a nice singing voice. Tidus was just hilarious. I called him David Beckham, because that was what he was: The hero constructed by Fayth was goddamn David Beckham.