I've always noticed that while Elder Scrolls games have very deep and interesting lore, they never really managed to make me feel like part of the world. Now, there are many little things you can do to greatly increase the amount of presence the player feels. Things like these:

Being able to see your hands while reading a book (and of course animations for flipping pages)

https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcQkrWBgYtaynoNGFLb-tOP_IrwYj0Yg0G-iuPRB6MU1jgugJ29G

Being able to see your legs (and of course all would-be third person animations would have to have some effect on the first camera)

https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcSU7zdCDcyKx39v-CP3YI6Tz27PY5iD1DKo-GJ0jbNC3gj7rKa3

More satisfying combat (this could take the form of physical reactions for being hit, a more in-depth blocking system that could allow for clashing, or your sword getting stuck in an enemy if you get a solid hit on them)

https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcQkvCEVqzoTVWc-aL0bbuC2gizO1moF5sv_jOojJnUyZD55tOco6g

And lastly: More animations for the same tasks. This is a big one, as the lack of animation variety can really make a world feel stale and dead. I believe this was one of the issues with Skyrim, it had the exact same running, walking, talking, and combat animations for all characters regardless of age, injuries, armor, and whether or not they were undead.

Things like these could really add a lot to any TES game. But an MMO in particular would benefit from this sort of polish, as it is an area almost always overlooked by games in that genre.

You can see your hands in ESO. That read a book with hands would be nice, but meh.

There really is no need to see legs in first person view, IMHO. I may look down once in a blue moon, so seems like a waste of time to put legs in, for me anyway.

Combat is just fine as far as I am concerned. However almost anything can be improved.

I agree these would all be great to have. I'm not holding my breath for the full body view though.

The legs thing is kind of a personal preference, I've always found it hard to get immersed in a game when I'm blatantly just a floating pair of arms.

As for combat, many if not all modern games that involve combat have it refined to feel very visceral and satisfying. TES games on the other hand have been a little behind the curve for a while now and I see TESO as the perfect opportunity to bring them up to par. Not that I think the combat is TES games is bad strictly speaking, but like you said everything can be improved upon.

For me immersion is more than just the combat. It is why i press so hard for more and better crafting as well as player housing or guild cities. I find disbelief that every second of the day my character is exploring dungeons and fighting the opposition...cant he/she just do some gardening for a day?!?!