From what I understood of OP's description of the process, it sounds a lot like the sort of awareness that's cultivated through long-term and consistent practice of meditation (implicitly or explicitly depending on the school of practice).

I noticed after a couple months of initially starting daily zazen practice (just 10-15 minutes every night), that I went from reacting in a way that was originally: event -> (usually 'extreme') reaction, to something more like: event -> stepping back/observing what would've originally been my reaction -> choosing to engage with it or not. After a year of practice, this new pattern of reacting basically became muscle memory and would happen _even when_ I sometimes wanted to strongly react to things (i.e. music/art/social situations with friends/etc ).

After about 4 or 5 years of consistent practice I caved into what I had even read was a common pitfall for most practitioners in thinking that I had "achieved" most of the "benefits" I could from meditation and just stopped practicing all together. It took about a year for most of these benefits to even start decaying, but after about that 2 year mark, my pattern of thought/reacting had almost entirely gone back to how it was before I had ever started practicing.

I'm thinking there has to be some happy medium where you have the ability to observe as well as engage, but I'm not sure what the original philosophies of the practice actually "advocate" for as I never really delved too deep into the literature on this.

I think this was actually one of the main reasons I stopped practicing, because I was wondering if my 'artistic side' was being 'dulled' by meditation. This is still a question I want answered and have been wondering if it may be worth doing a deeper dive into the literature/having a teacher guide me through the rest of this journey.