It's not out of character, but it's out of the norm. Let's all remember that Picard was traditionally a diplomat and academic first, fighter second, hence why the action-oriented character of Riker had to be created. For every episode where Picard had to get his hands dirty, Riker probably had 5 or more. I never said Picard wouldn't fight, but whenever he did on TNG, it was rare. That's what makes his fights special.
Exactly what a Trek movie needs. Special stuff. What I like about all the TNG movies is that they put the characters in special situations. They would have never killed off Picard's family in a regular episode, or gave Data an emotions chip or destroyed the Enterprise for good.
The thing is, all that can work for Generations because it was the TNG crew's first foray into film (and you're right, those are DEFINITELY some special moments), but if you keep using the same special stuff, it won't be special anymore. Killing Picard's family and crashing the Enterprise-D is more or less the same as killing Data and wrecking half of the E-E's hull; it's stuff that doesn't really shock all that much anymore.
If you keep putting Picard into such fights, those fights lose their luster and meaning, basically (worse yet, it makes someone like Riker a redundant character). After all, in the Trekverse and among the fans, he built up his reputation of being something like the anti-Kirk, someone who was thoughtful and careful and methodical. This was a guy who could outwit Q while arguing that humanity didn't need violence to solve its problems.
I can forgive FC (actually, more than forgive... it's one of my top 3 Trek films) because it took certain cliches and twisted them, or that there were so many special moments by themselves that they outshone the cliches. For example, we never saw Vindictive Picard in full effect before (Hugh saw nuthin), so to have him go up against the Borg Queen in a way we've never seen before was indeed special. And how often do we see anyone,
much less a civilian like Lily, ever tell Picard off?