A. Sometimes complete freedom is an illusion, as the GM is always working behind the scenes to guide the action towards her/his intended goal, or at least one that makes the story interesting. Then again, exposing that illusion isn't always the best idea. This method [i]could[/i] work with the right players, but at some point the GM may need to surrender some of the plot-guiding powers to her/his players to make things flow. I've seen this accomplished as a group writing a pseudo-fiction (like an online novel) where all players had input into the next story events. I've also seen a game where the GMs would ask if someone was interested in taking a certain action, after which they would talk to the volunteer player behind the scenes to set up the plot and let them write it out. I've never really seen a game where the GM dictates every action unilaterally, that's called being a novel author with ghostwriters. 

B. I enjoy having everything out in the open. Knowing what is going to happen often helps me, as the player, set up things for my character's future events. It makes the story so much more satisfying when they come to fruition, then I can see the long planning and hard work pay off. I'm not a fan of being a complete slave to whatever the GM pulls out of the hat, I do like to know where I'm going in the roleplay so that I don't step on toes with my next post. There's nothing worse than posting that my character has just entered Room A just before the GM posts that Room A is completely blocked off and inaccessible to all characters. Surprise me? Sure, but don't leave me blind. 

C. It can work, but remember that prophecies can be interpreted in many different ways. That is often the plot point of many stories with prophecies. Also, what ShonHarris said.