I think that a game can use it´s own degree of inertia… as it have this own degree of speed, like FIFA… someday, just to curiosity, calculate the speed (acceleration and full speed) of players… you will realize that the slowest players can easily beat Usain Bolt lol
But… ok… FIFA have reasons that make this speed work (like compress an 90 minute match in 6 minutes), but it still a little bit lame, and never a player that knows a little about football will be fully immersed in the game… and, that´s why they always need to jury rig some aspect of gameplay every year… that´s because when you try to be real in a not real way the system will ever collapse in some point.
I also don´t think that ArmA is the solution… cause in that game is harder to turn your soldier than do the same thing in a bloody battletank. But it´s aways about balance. First a game engine must support inertia… then the physics guys and the testers must find the balances… the speeds, equipment/body loads and fine tune all of it until it work.
About sense the inertia: There a lot of things much less usual, like feel pain (bullet or bazooka hit kind of pain) or jump very high, that games “force” players to assimilate. May the movements can be a little more loose… players will understand if the camera don´t stop just after you release the “W” or if you slip a little when run & turn. Just a little of inertia (less than reality… more than in Wolf 3D) can change a lot the gameplay… in a sword fight solves a lot of hitting problems, because the weapon handling can be more real and intuitive (yes… I believe that in games reality is always more intuitive… and intuitive = fun).
And, yes… animation is very important… more than modeling or texturing… Bethesda can say LOL