Yes, I agree fully that characters should, as a general rule, always be permitted that freedom of choice. And the SC should be able to deal with those free choices.
I try to strive for creating a story framework, rather than a complete structure.
So where is the line drawn on that? I think a framework brings characters recurrently to points where the question is posed - "How are you going to deal with that?" Or simply "What will you do now?" And leaves the ball wholly in their court. It also allows them some latitude in initiating an activity, and branching the story off in a direction of their choosing.
As I said,
some latitude in doing so...because, too much of that, and you won't have a plot, any longer. Or a story. Assuming one actually wants a story. Not one of those where there are multiple locations threads, and characters wander in & out, having random interactions.
I also maintain a non-public OOC, specifically so the cast and myself can discuss that framework with the cast as/if the need arises. This may kill some of the element of surprise, in some instances, but it does make for more truly collaborative fiction. That may not appeal to some - It is my personal preference as an SC to work that way.
Beyond that, I find it is truly more art, than science. The longer any story I manage endures, the more I'm confronted with what I could have done differently or better...it is forever a learning process. Like so many things. And sometimes I learn faster than others.
I don't know the above adds anything Shanna didn't already say, or that you don't already know, but it's all I can tell you.
As to character backgrounds and pre-gens: I can't personally work with pre-generated characters, nor adopt those of other writers. I'm just not wired that way...it doesn't work for me.
Now, the SC being involved with the character background, that's another story. Generally, I'm striving to create a
persona. There are usually and often a certain amount of details pertaining to that persona's background, that are not particularly significant to me. These details, of course, vary from character to character. A birth locale may be highly significant in the case of one character, and not at all for three others. I'm personally well okay co-creating a character background with the SC, as long as the process doesn't dilute that persona's core concept, nor push it in a direction that leaves me with no or reduced fire to write it.
One game I played in over in RPOL presents you with a series of questions, about the sort of person you want to play. You basically define the personality, social status, key attributes, skills and focus of the character. As well as some of the significant life events. From that, the GM fleshes out everything else that pertains to the background, and fits it to his world, which is home-brewed and pretty detailed. I really enjoyed that process - it was a lot of fun, and I ended up with a character I really wanted to write for.
In terms of the way you describe these secrets, I see no problem with that at all. It's a key part of your plot, apparently; of coruse, if anyone really has an issue, they won't join. But every story is gonna have its deal breakers for
some portion of the player population.