This is of course fairly different than something like your average game where death isn't permanent or particularly impactful, especially when killing nameless/faceless opponents.
I'm not sure what about the game creates that feeling, but I think the game is much better because of it. Some of my best moments in the game were during rescue missions (one time I had a lander on the Mun with no docking ports and only enough fuel for a short sub-orbital hop; I managed to rendezvous with the lander mid-hop, then EVA the kerbal into the rescue craft.)
Right -- you can replace all of the humans with mechs, and the ak-47 with some sort of power-sapping stun beam (that disables, rather than destroying, the mech) and many AAA games would play just as well.
There are people who seem to really like "ultra-realistic" gore instead of exploding robots or de-summoned cartoons, but that doesn't change the fundamental basis: most AAA games are about scoring hits against hitpoints, not really about violence.
Or with paint! (http://en.wikipedia.org/wiki/Splatoon)
The same goes for movies. Most people will watch movies with some violence, but movies like Saw don't have mainstream appeal.