The difference between GTA 3's engine and the Hero Engine is that GTA3's engine was designed FOR gta. Not for a similar genre, but for THAT game. The hero engine is just an engine available for MMORPGs. This means that the engine wont be "specialized" at what a TES MMORPG will be. I would have no problem if they coded an engine from scratch, then made 2 other TES MMORPG's or spin-off MMORPGs (maybe fallout, it's always run on the same engine(when bethesda made/published it at least)) from it. However, they're not even doing that, they're just getting a cliche MMORPG engine. This means that the engine wont be FOR Tes:O, it will be for a cliche MMORPG that is modified to make it work for TES:O.
It's like a modder modding a game vs creating a game - the game is going to be closer to the original intention if they don't have to work around flaws in the current engine.
I see what you're saying mate.
Obviously I can't speak for ZOS, but if they wanted to license an engine rather than create one, maybe they felt the hero engine was the best to go for.
Look at gamebyro for oblivion. It was able to be upgradable for Fallout 3 and did things that were great. Again it was used for NV and Obsidian were able to do some great things with it. Things like crafting and weapon mods, survival and cooking etc.
Until we see gameplay, we can't be sure that ZOS hasn't done some great things with hero engine. Just a waiting game for us now.