7th Sea uses a background mechanic that sounds a bit like what you're describing. Players buy Backgrounds for their characters and use them to earn XP by entering into conflicts involved in that specific Background. For example, if Nikolai the Mecenary buys a Hunting background and labels the daughter of his old commander as his quarry he'll earn XP when he questions the town guards about seeing a girl matching her description, when he sneaks into the house of her older sister, when he battles the pirates that have kidnapped her, etc etc.
It's a really handy mechanic to have because the players are telling the GM exactly what sort of plot(s) they want to explore. Even better, they can do it during the game and not just in character creation! Another example: The party defeats diabolical Inquisitor Alonzo and one of the characters takes his personal bible and rosary, one-lining that an evil man should not sully such things. The player of that character buys a Nemesis Background and declares Alonzo is the other party of that Background. Guess which NPC is going to make an appearance down the road (and probably
at the worst possible time)? Anticipation is a delightful thing.
