1) In my experience, and looking at a few tech demos, you can create a pretty impressive scene with ASCII. Most roguelikes don't attempt this, however, as they are often restricted to small maps, limited viewports, and few colors. You have to play to the strengths of ASCII - it's very poor at showing more than one layer, so the "vastness" of something like the caves in DF is lost. You also have to nurse the player into the display style. An incredible DF map is so much text garbage to the inexperienced, and even old pros will have to carefully watch scenes to understand exactly what the hell is going on. I've been thinking about my own little roguelike, and I think the best way to make it impressive is through full-color and lighting. "Brogue" is a wonderful example of this.
2) In realistic art, especially portraits, there is something known as the "uncanny valley." Basically, it means that an image can get close enough to realism that starts to be disturbing in its minute flaws. In roguelikes, I like to think of the "unplayable valley." I've tried to play some of the really deep roguelikes out there, and I quickly get mired in all the races, classes, spells, items, traps, monsters, professions, etc. that can screw me over or actually allow me to get into the game. My absolute favorite roguelike is Doom RL because it uses a small subset of features that I can hope to understand and overcome in a relatively short time. On the other hand, I love the combat in DF's adventure mode because it is largely intuitive, despite its complexity. Ideally, I'd like to play a game like the latter, but a simpler combat system (perhaps even a rudimentary one) is probably the most feasible and most fun. Doom RL works well because it has a few key strategic elements; cover and weapon choice. I'm not sure what works best in a more traditional roguelike, but I've been thinking about a system with relatively few commands, like the Assassin's Creed games or Arkham Asylum. If I have to start setting up hotkeys and macros just to use a key spell, I'm not having fun.
To answer your question more precisely, I like my combat fairly predictable (ambushes are fine, but game-ending critical hits are frustrating), turn-based, and with a limited number of commands that vary in efficacy according to your circumstances.
3) I prefer unique items over stepwise improvements. Replacing a wood sword with a stone sword with an iron sword with a steel sword is boring. If there are only a few such advancements, or the game is very long, I can see the purpose. Otherwise, I'd like to see nearly every item remain relevant for the entire game, and focus on either character improvement or item diversification as the measure of progress.
4) If the game is about magic, and I am playing a wizard, I want throw a goddamn fireball at someone's face. Otherwise, "lower" magic is better, as it keeps magic from becoming mundane or underpowered.
I'm not sure there are any games out there that really capture "low" magic. I just don't see how it would be playable. It's more of a storytelling element at that point, and the only way you could rationally express it is if its woven into the narrative of the game.
High magic in the sense of Diablo is cool, since it allows for specific class development and prevents the player from becoming an all-out powerhouse. High magic in the sense of Oblivion sucks majorly, since it allows anyone to be a master of everything purely through effort, and ultimately you are just reaching for stronger fireballs.
It goes back to my comment about items - it's not about whether the magic is "high" or "low." It's about the magic's uniqueness and purpose in the game. If you are going for a "classless" system where magic is available for everyone, you'll have to find some way to encourage the player to be a specialist.
Mana bars are OK, as long as I don't have to mash the "wait" key for it to recover.
5) Mods. Competitive gameplay just isn't my style, and I really don't think it's appropriate for a roguelike (except in the context of final score and other achievements). That said, I'd rather play a fun, hard-coded game than a bare-bones engine that is barely more than a level generator and a damage calculator.
Final Note: For the love of god, no player needs like hunger or exhaustion, unless you are going the super-realism route. The same kind of applies to things like torches.
In reviewing the other posts, I see 3 and Ari said a lot of the same things. Cool!