Collaborative World Building

I've been noodling around in my head lately with collaborative world building and RPGs. The problem for me that it solves is the lack of setting buy in with my players. You see, I tried running a Savage Ebberon campaign a while ago, and it didn't go the way I wanted. The main problem is that I know much much more about the setting than my players do. I didn't do a good job of selling it to them, and I have a hard time explaining why the characters they wanted to play just didn't fit.

When a group builds the world together, that problem should be negated as the players know just as much about the setting as the GM does. Since they put things that they want in it, they should dig it.

Many games use collaborative world building, and they include it in the core text. I've been using a modified version of a Spark in Fate Core with my group.  The modified part is that I'm zooming in on the action. I'm proposing three levels of zoom.

For instance, if you're doing a high fantasy game, you could first build on a planar level. Create the gods, their spheres of influences, relationships and conflicts. Then build the world as a whole with land features and the people that inhabit them. Create their political landscapes along with the global issues that can come up in a game. Then zoom in again and do the same thing on a local scale. It can be a single kingdom, or city. Give it locations, important people and local issues that come up in game.

I've been pondering a space noir game, and I'm planning on using this idea of zooming in with that as well. Maybe start with outer rim planets, then inner planets that are more commonly seen followed by the "home base".

It's entirely possible that this is already done in an existing game, and I'd love to hear about it if so.