For me, the problem is simple. No MMO has captured my interest because I simply don't matter. No matter what I do, it has no effect on the world. So I got together a huge raid and we killed another faction leader - no matter, he'll be alive again tomorrow. So I just killed Azgaragoth, Devourer of Worlds - meh, he's returned from the dead so many times that people just aren't taking him seriously any more - after all, we just found the lair of his brother, Izgirigith, Eater of Planets who drops 'Phatter Lewt'. Eventually, the whole experience palls.
What I want is an MMO where players have an effect. So what if a storyline ends - there are many stories to be told in any world. Some could be run by the staff, but others, if the game was well made, could be created by the players themselves. Imagine, some random mage finds a book of forgotten dark magic mouldering forgotten in an abandoned library and uses it so summon a horde of skeletons. The remaining players of the world decide to band together to stop him.
Which brings a few important points - first, there must be some form of permadeath. In order to give edge to a story, there must be a fear of loss. Otherwise, there's no dilemma for the player who is the mage - with permadeath, he has to make a choice - he's going to be killing other player's characters and risking his own death in a fairly spectacular way, but it's a choice, and he's unlikely to be accepted back by the players if he repents (which opens the way for further story opportunities).
The next thing is the existence and creation of unique artifacts. So what if I have The Flaming Hammer of Doom which kills everything in a 2 mile radius of me if every swordsman and his cat has one. In fantasy, heroes are so often linked to their weapon, or their armour, or some talisman or other. For example, in Warhammer, Sigmar has his hammer thing, in the David Gemmell books, Druss the Legend has Snaga, the list goes on... Dealing with the creation of these artifacts, is, in my view, more difficult than dealing with the distribution which can simply be form the crafter itself. If such artifacts are to be made possible, the carfting system needs to be made interactive and needs to require a good deal of skill.
Thirdly, leveling and grinding are out. You cannot, simply cannot, let a player grind to level 500 and go around killing random strangers permanently simply because he vastly overpowers them. Which means combat would have to be overhauled to require skill, too. An example of how this might be done can be seen (though the game is unfinished) in Mount & Blade. Leveling makes you stronger, yeah, but you never get to the point where you vastly outclass everyone (and if you do, it's because you've beaten up a whole host of people using your skills to start with.)
The final thing needed to be done in order to facilitate this sort of gameplay is a need for anonymity of the characters. No big flashing logos over your head announcing your faction and name. This gives the opportunity to impersonate people, or to adopt a new identity, which can lead to all sorts of fun - a game with permadeath is a game which is vicious by definition, but the possibility of duplicity forces a player to think more, to engage more with the game. Also, this allows an assassin to sneak in to a castle and murder a king in his sleep in a much more interesting way than having the assassin character press his sneak button then try and avoid the guard character.
A quick sidenote - there would absolutely have to be npcs who can be hired/ordered around and display basic intelligence so that menial things could be left to them rather than have the players be the guards. NPCs could also be placeholders for important characters at the beginning of the game, say, royalty.
From this start point (ambitious, yes

) you could then begin to develop the game out into more directions - settling villages, city/empire management, magic (which, like combat, would have to be a more interesting variety then just point and click - except instead of rewarding individual skills/reflexes could instead reward study/creativity) and all that jazz.
Yeah, I've thought about this a lot. I don't think such a game would be impossible to make - I used to. Then I saw Dwarf Fortress, and it occurs to me that games don't necessarily need to follow the beaten path, but can develop new solutions to problems.