The concept has been around for a while: it's actually called a "Theme-Box" and several MMOs have attempted to adopt its properties, rarely in any successful form. I think the closest one I can cite is SWG toward the end of its reign.
The trick however, to making a successful theme-box is to not compromise either one. You can have a robust and amazing set of story and lore-driven quest-lines that take you all over the world in PvE and PvP contexts, with a structured end-game, all while having a malleable, player-driven world from the economy and housing, to the factions, to the wars, etc. It just takes a lot of time, money and manpower because you're essentially creating both games in one that must seamlessly fit together. You are not creating a hybrid of the two, because then both are diminished.
Also, you guys touched on the concept of the sandbox versus the beach. One of my very early mentors said to me "you can give them a sandbox, but don't give them the beach." An example of a game that is a "beach" is something like Wurm Online (Notch's first big game before he made Minecraft) where the sheer size of the world and freedom to explore and interact with it, actually works against player's desire to explore and interact with it (the psychological precept of "choice overload").
I do not agree that ESO is a theme-box because it is too compromised. Even the PvP end-game element does not fully make up for it. It would have to go a lot further into sandbox territory to reach theme-box level. But this is a rare gem of a well-reasoned post from Qallidex.
I find you a very confusing human being Qallidex...one minute thoughtful and articulate and the next...an insulting one-line throwing barbarian. This is one of your thoughtful posts, and as tends to be the case with those, you have a good point. But I find I agree more with Elth.
Until this thread popped up I was convinced that Qallidex was a troll actually and rarely if ever responded to his posts. With the amount of flaming, insults, one-liners and blatant self-contradicting you do Qallidex it was hard not to come to that conclusion. Maybe two people use the same account, or you are often drunk? Whatever the reason it's good to see a real thought come out of your head.

We may be on the opposite side of a rather heated debate, but I'm glad to see you put in more than 2 cents worth here, even if I disagree.
I think Matt Firor said it best in one of his interviews stating MMOs are a game consisting of many games within.
Can you please give a source for this because I would like to understand the context?
Here's why. Basic MMO design 101: No matter how big your game is, no matter how many features you have, it is still one game, not a collection of mini-games. It must be one, large cohesive experience. Every feature, every element, is a cog in one single machine. This is a big mistake that many designers have made in MMOs in the past. Just giving a lot of people "something to do" doesn't cut it. It must be "something to do within the context of the world that actually feels like it matters, either to the player or to the world as a whole."
Great example of this is a little feature in Fallen Earth: gambling. You can play slot machines, roulette, video poker, video blackjack (all in real-time, in-engine sequences) and what is the point? It is an economic money-sink, but it's also fun and it fits the context of the world.
You can also do this in Darkfall (in a different way) and that is one aspect of Darkfall that feels VERY out of place, and incongruous. I never wanted to play slots in DF because it didn't feel right, but in Fallen Earth, I gamble all the time, sometimes even strike it big!
Not the best example, but one that was on the tip of my tongue.
Hopefully this is not what he meant. When Todd Howard is asked what sets TES apart he never talks about one thing, he always talks about how the parts are put together to make one big cohesive whole, and THAT is what most RPGs lack and why they often fail to be compelling experiences.