Singularity - Underrated fps. If I remember right it has a weapon upgrade system. You naming Wolfenstein in your original post made me think of this.
The Binding of Isaac - This game might be the best value I have ever gotten out of a game. I've spent about 8 dollars on the game and have almost 70 hours logged. Plenty of items, challenges, characters, and secrets to unlock.
Dead Rising 1 & 2 - These games have frustrating gameplay quirks but I do enjoy the leveling up character progression in them.
Shadow Complex - If you want something that plays like a Metroid or Castlevania game.
Crackdown 1 & 2 - Lots of character progression and things to collect in these games.
3D Dot Game Heroes - When I think of an action-rpg, the Zelda franchise comes to mind. This game is a fun parody of many games with the main inspiration clearly being Zelda.
Dead Space 1 & 2 - I love these games. Weapon and armor upgrade system in place. New game + ( I believe only on the same difficulty though ) allows you to bring those upgrades into another playthrough.
I could probably go on and on listing but I'll cut if off there. I think a lot of those give you that sense of progression you might be looking for in an action game.
Nobody on the crew seems big into competitive gaming which is disappointing to me. I understand that they don't have the time to dedicate to that aspect of a game. Makes it painful to watch TNTs a lot of the time. Ryan playing Super Monday Night Combat was especially cringe-inducing. The TNTs that have the crew playing games they actually care about seem to be the most entertaining for me, whether it be Will Smith playing TF2 or Brad playing StarCraft II.
Anyways, it's hard to pick who is the best. They all have their moments in different genres.
Tales of Vesperia sounds like a perfect match for being able to co-op battles with her and get a JRPG experience out of it. Was probably the last JRPG I played I thoroughly enjoyed. It might be difficult to track down a copy though.
Rayman Origins would be a good choice just for a kick-back casual gaming session together. Pretty cheap now too at around 20-30 bucks.
I enjoyed both DMC 1 and 3 immensely so this package is tempting. It has been a decade since I've played the first DMC so I wonder if my memories of that game would be tainted by playing it now. I feel like I've been spoiled by newer generation games. A lot of games just don't hold up that well when I go back and play them many years later. Plus, Nintendo 64 through early PS2 era games can look just plain fugly.
Also, it has to be an early nominee for worst box art of the year. Looks like a lazy design.