Except evidentially, Other M was definitely made to be more story driven. Directional decisions like more focus on the character, extremely linear gameplay and even a theatre mode shows that at least to some extent, the story mattered to who was making it. So if it's going to be presented to a great extent like that, it had to be done well, and looking at the reactions, something didn't go right.
Plus, that scene could've worked (or at least, gotten less backlash) with more elaboration. Remember that the scene doesn't tell us why she's freaking out, and unless you read an obscure manga from Japan that never got officially translated, you were totally clueless. It's not good story telling even by modern game standards if you have to rely on the audience to read the background material, particularly when beforehand, all of the previous games in the series she handled herself without any trouble.