Okay, first, I just want to thank you for your excellent response.
I'll admit, I don't think art must necessarily illustrate the human condition. I think good art often does, but it can also just be something that evokes an emotion. Of course, lots of things evoke emotions, so that's obviously necessary but not sufficient. I agree that the expert exercise of craft can be quite enjoyable, but that too is not sufficient to be artistically interesting or else all skilled workers would be artists (and if you feel that way, we really aren't talking about the same thing when we use the word "art"). This is already a debatably overly-limited definition of art, but my point was to unpack the idea that art does have various motives, goals, and effects on the viewer, as well as many ways to achieve them, and that is a fine thing.
However, I wasn't trying to debate what is artistic and what I not. I was saying that for those of us interested in games as art, Bioshock is an exciting game, and it's exciting because it does something new and it does it well.
I don't understand how you can get out of what I said that I think Bioshock's story is what makes it art. To say "ahh yes, but it's not a movie!" is to miss the entire point, (which may very well be the fault of my writing). The point is that it controlled me and I enjoyed it. The point is that it told me I was a slave AND IT WAS RIGHT. Because of things I DID. And it did it in a way that only a game could, not a movie or a book or a song.
I said Bioshock was interesting and I stand by that because it did something that none of the games you've cited do: the rules of the simulation and the rules of narrative played together to make meaning that as key to the game that couldn't be made in strictly simulation or narrative forms alone.
You say the "gameplay doesn't distinguish itself much," and if you mean the combat and other kinetic elements don't particularly stand out, I don't entirely disagree, but that's missing the point. When you say that Bioshock's story isn't well told, however, that's something I disagree with strongly.
I wish I had time to discuss each of the games you listed, because we agree on some points and disagree on others, but I don't, so I'll try to address some of the themes I saw.
You defend some Nintendo games for being something other than literary, and you and I are in agreement that that's not required to be interesting. Too many people think that a game has artistic merit if and only if it has a good story. There are a whole lot of good games without a story, or with a terrible story that they tell well (e.g. Half-Life 1). This isn't the point.
However, story and how it's told is important stuff in a lot of these games. But how do games tell stories? Like literature and movies, games have character development and pacing, but there are also aspects unique to each medium. Literature has the craft of writing, movies have framing and mise en scene. Games have other means of telling stories, and we're still figuring some of them out. Bioshock tells its story and evokes something in the player in a way I haven't seen before. That's why I said initially that it's one of the most exciting games out there. It's exciting because it's trail-blazing. It's exciting because it uses this to be an indictment of its own genre conventions.
Finally, you write, "I think art means making fun games above everything," a statement that honestly makes me rather sad. There are plenty of great things to do in terms of making fun games and finding new ways to make fun games. However, you make the analogy of games to film: do you think Citizen Kane was a fun movie? Should Kubrick have worried more about making Paths of Glory more fun? I don't think fun is bad, but to limit our definition of a good game to what is fun is to put on blinders.
tl;dr - Good literature isn't about plot and neither is BioShock. Good literature and BioShock, however, both use their medium well, and BioShock is exciting because it shows us a new way of doing things.