Not really. Guild Wars - MMO where you could not really improve character with grinding also ended up being grindfest because people still wanted pretty items (even if they were sometimes less powerfull that ordinary ones) and nice title under character name.
Grind also happens when you run out of content. No-one sane will grind that +3 right away. But grinding it when they run out of interesting quests/dungeons/exploration/whatever is natural choice - the only other solution is to quit game. Also noted in GW. People were done playing but did not want to quit so they ASKED for grind.
I can think of precisely one online game that isn't a grindfest, and it's the only MMO I've ever paid for. These days it's gone a bit downhill in terms of the size and quality of the population (which more or less makes or breaks the game) and the implementation of a whole variety of features (although the new devs say they'll be fixing that, eventually) and a very, very small grind that only a small portion of the population partakes in for any length of time, but it's still reasonably decent.
Anyway, on to the point of that lot. Grinding isn't absolutely necessary in a game, but it is very, very difficult to avoid. With sufficient levels of depth and complexity and / or a reliance on the abilities of the individual sitting at the screen above and beyond stats within the game, it is doable, but it will need an awful lot of thinking and planning in advance to make it work at all (as shown by the above example - a series of very minor adjustments utterly destroyed the balance that had previously existed for a long while (years), that it's only just beginning to recover from).
Or Urist the resource gatherer/auction house economic speculator.
Really though, the reason to why every MMO bogs down to a lame grind race is because in the end its the numbers on your equipment and not your skill that matters most.
But anyway, having a slice of economy is necessary for the DF roleplaying experience get closer to being complete. Imagine playing as a trader, gathering enough wealth to buy yourself a nice mansion in the richest part of the town, become a member of nobility through your money and influence and eventualy usurp the throne. An RPG doesn't need to consist only of "I HIT ARGUEBARGLE WITH MY STEEL SWORD +3"
Well toady has mentioned a fast forward feature for stuff like meditating under a waterfall for a week or hanging out in giant tree for 3 days. Given that you have the tools and corresponding rooms i could imagine the same would apply to farming. And you could still hire some people to help you out with the farming given that you have some cash.
Well, the point I was trying to raise is that, while this stuff can be a part of the game, that doesn't mean that just because we have to include some crafting and a way to make a living off of doing crafting, we shouldn't be coming up with ways to make it more fun. (Or Fun, as the case may be.)
I have played relatively few MMO games, and never played World of Warcraft, and generally only liked the ones I liked, however briefly, because I liked the people I was playing with, and generally just went with the grind because that's what you had to do, keep up with your friends.
There was only one MMO that I actually "enjoyed the grind" with, and that was Puzzle Pirates.
I loved carpentry. Most people hated carpentry, too, which was all the better for me, because I could go into sieges, pull incredibles all day, and walk away with boatloads of cash for my trouble. I didn't care whether anybody needed carpentry or not, if I was on a boat where I didn't have to care about the outcome of the battle too much, I would carp, and was basically capable of single-handedly keeping a mid-sized ship in top shape.
I actually only started getting bored with the game when I did get involved with the community, and wound up having to play the games I didn't like as much. (The damn non-combat navigation puzzle... which was very boring and repetitive, but which I was the best in my flag at, so I wound up either soloing to raise money by navigating around all the time, or I was navigating for my crew because it's an important job, and I was the best at it. Also, loading cannons.)
The thing is, you don't really have levels in Puzzle Pirates, you just have property and cash, and you do things to get money and buy neat things like your own boat or large houses and furniture and clothing, and if you gather enough people in your crew and enough crews to make a flag and enough boats under your flag, you can even go claiming islands.
I'm kind of drifting WAAAAY off point, but what I'm trying to say is that there are a few ways to make these things actually enjoyable and worth doing for more than just having the option to do them.
One way is to make there be a reward for grinding cash. To an extent, being able to buy land and build a house is certainly something, if only for the "dollhouse" fun of being able to construct your own personal little playpen. Still, this makes the grinding a bit of a chore to be done in order to get to the fun parts.
The second way is to make the grinding itself fun and interesting. This means that, like Puzzle Pirates, you make the part where you actually are crafting something into a minigame that people would enjoy for its own sake.
In Puzzle Pirates, I didn't like the distilling minigame, but I had to go through the motions of being good at it to supply my crew with the stockpiles of rum they needed. I actually rather liked the alchemy minigame, though, and would happily waste time playing alchemy, even though I was only "practicing" so that I wouldn't waste my labor points that I needed to spend on distilling.
If the grind itself is fun, then you don't really need anything at the other end of the grind to make the tedious parts worth it - after all, many games have a "grind" where you have to go through successive levels or stages before you get to the final boss, but generally speaking, the actual act of rampaging through the maps is exactly what you came for in the first place, not seeing the credits roll.
If, for example, hunting all by itself is fun, especially if we make all the animals have more distinct behaviors, so that hunting different animals really does feel different, and not like a wild horse is basically the same thing as a mountain goat, but larger, then we can have a fun game just hunting those wild animals.
Likewise, if we want to make driving a caravan fun, we might want to look at the classic Koei
Uncharted Waters series, where you sailed as a merchant trader, explorer, or even pirate of the Age of Exploration. Searching out and exploiting trade routes, evading pirates, and picking fights with targets of opportunity whose national alliances happened to be enemies of your own were all fun in and of their own right, especially when you have things like the ability to make investments in certain ports to develop their markets, and having temporarily fulfilled the demand or exhausted the supply of certain routes, forcing you to find new ones.
For something like a "living the life of a farmer/clothier/potter/bowyer/cheesemaker" to be a fun game, we need to introduce something that might make the actual act of whatever labor it is you are doing become interesting.
I'm not sure if Puzzle Pirate-style minigames even fit with DF's motif, much less are a right answer, but there should be an effort to put some kind of dynamic spin on most of the jobs that a player can take up.
The third way to make things enjoyable, however, is to make the world around it enjoyable. This is what most MMO games live upon - they have a boring, repetitive game, but you can play it with your friends, and you derive all your fun from hanging out with people that you like online. (And the game is agonizing if you hate the people you play with.)
In order to do this, as I hinted at before, you need to generate procedural populations in towns that are actually fun to get to know.
This goes hand in hand with the sort of "The Sims" dollhouse aspect of the game, where you can basically not only make your own little cottage on the edge of town, but where you can then go out and interact with the neighbors in some sort of meaningful way. In The Sims, this means doing things like setting up block parties or trying to have a character that "Woohoos" as many other characters as possible, or otherwise having some sort of way in which you can feel like your character is participating in a world with characters that have motivations and their own personal dramas. Then, you can start trying to manipulate the story to your own liking.
Ideally, these characters would be capable of telling some sort of procedurally-generated life story where one boy is in love with a girl he's known forever, but she ignores him for the wild boy who spent time living with elves, and plays up his foreign tastes, but is a big show-off and phony. Or the competition of the two most notorious gossiping housewives in town. Or what the Dark Duck Saloon's barkeep has been putting in his brew that's been suddenly getting him so much more of the business around town...
And then you can walk in and kick dirt all over all the personal dramas however you want.
Maybe the examples I've listed are a bit too much to ask of DF any time soon, but something at least approaching what The Sims has will hopefully be the minimum goal.
Wow, that was a lot more writing than I thought it would be.