You realize they are directly emulating God of War with their sex scenes right, which by what you said is a "merging of western ideas of game design, style and emotion". In fact, Capcom has put forth a huge and failing effort to try and westernize all their games. Not sure where you are getting the opposite impression.
I'm surprised that people are so eager to attribute anything awkward as "japonesque" even with the blatant evidence already out there. It's actually very softcore by comparison to the GOW segments. So is the problem that they aren't going all the way, or that they included this segment? Considering the game seems more QTE than not, I wasn't that interested in the game even with being a CC2 fan.
http://www.youtube.com/results?sear...6l3356l0l6901l15l13l0l2l2l0l193l1451l3.8l11l0
I think most people can agree that God of War is an action game and that the majority of it is spent pounding around on enemies or navigating some platform-based obstacles. The QTE sex scenes are present but don't change the fact that GoW is, in fact, an action game. I know boss fights include QTE events but I think that was probably the trade off that the devs were going for - brutal, VISCERAL(tm), kick-ass cinematics (hopefully heightening your feeling of badassery) in exchange for less player control / freedom in some stages of combat.
From what I've seen from the AW demo and heard from sources, AW is probably closer to interactive fiction. When CC2 did Naruto, they were working with a popular IP and recreating experiences that people (especially fans) were emotionally invested in. The play outside of these "boss" fights was extremely shallow. AW looks to be even more so, yet lacks the support of a strong IP.
Does this scene have a purpose? Sure, we learn a bit of some important(?) exposition towards the end. Does it add something to the game? Not really. It's handled with that same clumsy awkwardness that almost all sexually-charged scenes are handled with in Japan's popular media. The hero, despite having god-like powers, needs to tear his eyes away from a pair of H-Cups and barely succeeding. The depth of his interaction is to splash some water on the girl and then when he finally gets drunk enough to attempt to seal the deal - he's knocked away in good ol drunken tom-foolery fun. The scenes in GOW were to reinforce how much of a badass Kratos (and by extension, you) is (are). It's comic book, prepubescent, wet dream fun (see Jaffe's other creations for further references.) You can argue that it also heightens the experience. Here, I can't really do the same. It's fan service, pure and simple.
I think you can agree that there are instances when skin, sex appeal, nudity, and whatnot can add to the game. I don't believe that this is the case here. I think it's being thrown out there for marketing purposes to try to pull people in by appealing to your pocket monster.
If you're a fan of interactive fiction or Indian mythology - you'll probably like AW, but personally I don't think this (or even the demo) is representative of good game design.