What? Never heard of that "myth" before.
People hold Citizen Kane in regard for pioneering and popularizing many different cinematographic techniques that revolutionized how films were made. With the newly widened scope of filmic techniques, filmmakers now had greater tools for formal representation and thus a higher potential for artistic representation. It's impact is still felt today, and most filmmakers can trace their techniques back to Kane. A "Citizen Kane of Gaming" would be something like Pac-Man, SMB, Doom, Mario 64, or Quake - games that similarly revolutionized how games were made.
Not quite. All creative works can be art, but only if that was intended in their creation. Artistic value is just another potential factor of the works we create, along with entertainment value and utilitarian value. Transformers, for example, was created as a pure entertainment/commercial product, and is not art as it has no artistic value. While his David was a commercial product, Michelangelo clearly created it with some artistic representation in mind.
Of course, being art does not make a piece of entertainment good. It's value then be multi-faceted - it's value as entertainment and as art would be individually measured, even if the manipulation of the work to serve either purpose would force them to interact with each other.