Well, that's where old MMOs like UO, SWG, and EO were interesting: they were social experiments , and if you read Raph Koster's old interviews, he talks about in-depth psychology, social interactions and all the shit they had to consider, it was real deep shit. Along the way, that somehow got diluted down to skinner boxes that are modern MMOs.
If you really want to design a great MMO that takes advantage of the medium, you might have to hire real scientists, historians, etc to figure out functional mechanics for it, and after that fails, you might have to adjust them on the fly, and try new stuff until something works.
I will give you guys an example: so most sandbox MMOs (e.g. Mortal Online, Darkfall Online, UO and EO to some degree, and many others) fail because what happens is this: they attract asshole PK types who proceed to grief normal players. Farming noobs in starting areas, that sort of thing. Eventually the normal players get sick of it and leave the game, and then of course there is nothing for PKers to do also, so they leave as well.
So you can give up and say, oh this will never work, OR... you can look for inspiration from RL. RL also has its share of assholes, but they generally don't constantly attack normal people (outside of some shithole countries). Why? Because in RL, there are consequences. You might get killed/captured by cops, avenged by relatives, lose your life in the attack, etc. So the threat of the loss of life/freedom keeps most assholes from going off the reservation completely. They will still do it occasionaly (ie criminals), but only when the payout is worth the risk. So they might attack a rich merchant in a desolate place, but they wont just randomly run around killing everything in sight.
Now in games, you can't have the same threat to life, but I believe you can design game mechanics that impose a a realistic cost on the player for behaving badly. Some of the previous MMOs have tried that in various ways, but those were mostly clumsy (you turn red for a while where anyone can attack you without repercussion), and easily managed by the bad guys. I wonder whether with more thought put into this area, much more in-depth penalties can be designed that will limit the assholes to meaningful acts of nastiness instead of constant pointless griefing.
Same thing with one faction dominating. Why doesn't this happen in RL for too long? Because ultimately things like entropy and conflicting interests of individuals shatter factions and alliances. There is no reason why game mechanics could not be designed to simulate those in a game. If the game is deep enough, it could happen organically: with a deep player run politics system, you would likely see betrayals, backstabs, and factions splintering on their own. If not, you could simulate them with more abstract systems.
I realize all of this would be considerably more difficult than shitting out another Skinner box MMO with zero depth, but hey, at some point, once the themepark bs segment of the market is fully saturated by cat people games, there might be some money to be made in branching out.