I realize you kinda acknowledge this in your post, but I do think this is a big part of what at least most of Kaga’s Fire Emblem games were going for with their less-important party members! To sorta tie this into another thought I’ve had, I’m pretty sure that’s a factor in why there’s so much randomness in Fire Emblem, too: the outcomes of those random rolls contribute to telling a story.
If a character lands a clutch hit or critical hit, dodges a fatal attack despite the odds… or perhaps meets an unexpected end at the hands of an unassuming foe, those are all big, exciting moments in that character’s story. Maybe they make some big breakthroughs in their training with some great level-ups of key stats, elevating their combat performance beyond what one would expect of them, or perhaps they pick up some new skills as their stats grow in odd directions, changing what you can use them for. From a player’s perspective, these elements can be frustrating just as often as they can be exciting, but I do think they add more to that “emergent narrative” aspect than they get credit for.
Actually, the reactions I’ve seen from players to @Relic’s Iron Emblem validate the appeal of this approach. Your party members in that game don’t even have names or unique portraits; they’re all just generic soldiers with only a number and a division label to identify them. Nevertheless, people have expressed getting attached to their playthroughs’ “versions” of these nameless soldiers, taking pride in their accomplishments, taking note of the distinct roles they ended up playing, and remembering their deaths. It can totally work!