No, all we have (perceive) is a model of the outside world. The brain is sitting in a black box (the skull) with some signal connectors to the outside. It only gets a stream of signals, and from that creates a model of the world. That it chooses to react emotionally to some of these signals is just a way of the brain to modify it's own behaviour (maybe trick itself for the good of the species, like the desire to mate and have children).

I think part of the success of the movie "The Matrix" was that we all knew that it is true, in a way. The only difference to the Matrix is that we carry the super computer that simulates our world around with us. We are not sleeping in tanks connected to the central computer - or so we think, there is no way to ever be sure...

I think you should have followed through with your "pain variable" approach.

A good read is "Braitenberg Vehicles", it shows how even very simple rules can evoke complex behaviour and the appearance of emotions.