Then we have the other end of the spectrum, with dynamic worlds. The problem is, nearly always they're entirely player-made. Full PvP, world is empty unless there is a thousand people playing. No NPCs worth talking about, no shops, it generally ends up being a complete grindfest... grindfest+permadeath IMO is not a good combination.
This is my opinion: if you're going the permadeath path, life must truly be cheap. You current Avatar can't represent 100s of hours of work, it has to be expendable. As for the world, I'd rather have some middle ground: have established "NPC cities", have monsters in certain areas drop because they're getting killed, but have them invade less traveled areas. Make them actually spawn from somewhere it makes sense: nests, villages, which are destructible, but also spread. Essentially, there's a tactical/strategic layer running on the background that the players don't even need to know about (unless they're doing some sort of Commander task).
With nest spawning I don't really mean an actual stream of monsters coming from a point. These spawning points could merely alter the density of enemies in the areas. Since the number of players is limited, and time is an issue, they can't cleanse the entire world, they can only try to have as large a "civilized" zone as possible.
About NPC towns... well, not really sure how to handle that. They could be fixed (like the towns in UO), with the caveat that they can be overrun by hostile forces, turning them into enemy bases, and they have to be liberated. If the hostile presence in the area ever climbs high enough, we can lose them again. Some sort of mechanism would prevent the entire world being inhabitable, an automated NPC army, or an indestructible capitol, or even just Administration intervention.
If I had my way, a MMORPG would have 2 layers: a Kohan-style RTS (but really slow
) where cities can be built and destroyed, played by some sort of Commanders (of high enough rank? Pay2Play?), and a 3rd person RPG where players can use the buildings made by the first one, and quests can be requests by these Commanders, for example to bring materials to a construction site or attack/scout a flag. Majesty-style.
Town sites could be fixed to Strategic Points, like in Kohan 2 or the first Battle for Middle Earth.
Yet the world would be static enough that players don't feel like the whole thing is collapsing all around them.
EDIT: Oh yeah, to make PCs expendable, I'd use some sort of meta-experience mechanic, where the Player (not the Character) accumulates some sort of character development points. Maybe the longer you survive, the better points you get over time, but once you die, you keep them and use them to roll a new character. I've drafted several variations on paper, I would probably use specific kinds of points like Fable... maybe for every 2 points in-play you get 1 meta-point, so your character still gets more powerful than a newborn one... I'm sure the concept can be polished a lot more to reach a happy middle point where people won't be just suiciding all the time but also don't feel they've lost a great deal when dying. Plus, dying means being able to specialize in something else, some balance mechanic would prevent you from growing too much out of your current specialization? It's all just ideas on paper really.