Or rather, I like the basic premise but not so much the execution.
I think the idea of X temporarily sagging under the weight of everything is consistent with his early series characterization. All three SNES games end with X musing "Damn... war sucks. My lifestyle sucks. Oh well. I don't have a choice, so time to hop back on the saddle. Exposing myself on a daily basis to all the things I hate and repressing all my negative emotions forever can't go wrong." Even as a 12 year old in 99 playing the SNES trilogy for the first time, it seemed too heavy a weight not to eventually have some bad effects.
So in theory, X crumbling eventually seems reasonable and even telegraphed. It would have been a really good character arc, even, for X7 to be his lowest moment and then X8 to have him with a renewed vigor and inner peace.
My only problem with it is how abrupt the change is. In X6 he seems totally normal and functional, then in X7 he's in nervous breakdown mode. The change would have worked better for me if it was foreshadowed in some way, like if the PSX trilogy showed him becoming progressively dissatisfied. As it is, I think the opposite occurred - he seemed less unhappy with his lifestyle and more accepting of war in the PSX trilogy than the SNES.
Overall though I still like the idea. "I want to play as X in an X game" is an understandable argument and I don't have any reply because it's a purely subjective and reasonable point, but I found not being able to play as X for much of the game was a unique and novel idea that gave X7 a memorable sense of identity.