I know this is not what makes or breaks a game (be it mmo) but I would hate (HATE!) if this game doesn't have animations for emotes like laugh, dance, applaud, etc... the small things that make WOW feel so...polished and higher quality production compared to other mmo's. Don't neglect the small things!
- death animations and sounds for each race
- all the subraces of Argonian and Khajiit
- no tails clipping through armor and objects
- usable torches
- boat transport like WOW (ships come and go) not like Skyrim (carriages static)
- fishing

what other small details would you like in TES:O?

-Remember that Bosmer cities are migratory trees.

-Please try to do justice to Summerset. It is before the Numidium and should be at the height of its glory.

-Similarly Morrowind. The Triune should play a large part in the politics and storyline, but please be careful with people like Vivec.
Get MK for that if you have to.

- Actual, living towns/cities
- No auto-facing
- Gnomes (kidding)

I don't think the subraces are all that necessary. Every game in the Elder Scrolls series has done perfectly fine without them. They would indeed be nice, but yeah.

As for myself, I'd like to see the following:

-In-depth character creation - if I can tweak the body shape, even better!
-Usable torches, as you mentioned, but coupled with a decent lighting system. Not like WoW's "every time is noon" lighting. I'd like nights to look like nights!
-Emotes
-An /e or /me channel for custom emotes
-Short-range/spatial chat channels, like /say, /yell and all that
-Chat bubbles
-Role-playing servers!

You think tails not going through objects is a small thing? Tell that to BGS!
Anyway,
- spears
- banks / loans
- underwater content

I'd like my own little cottage with its own little garden where I could grow things. Preferably a seasonal cycle so that I have to sow and reap the harvest.

Additionally, I'd like to find my own little wife and knock her up. When it's been, say, 18 years in game (18 months/weeks IRL?), then I'd like my boy to be a grown man, ready to become my playable character. My first character, the patriarch of my house, will slowly retire and eventually die, OR die in combat. The fate I choose for him will give my new character a permanent buff and reputation with the locals. If my father died a glorious hero's death, then I'll gain some benefits to my attack, and if he died a natural death, then the merchants will give me discounts as they fondly remember the 'old gaffer' who treated them all so well. On top of that, I'd like to name my house/dynasty and create a shield for it, which will be displayed on all my armour and on my banner that I can plant on corpses.
My old mother could stay in the cottage and spin yarn or cook for me. I'll find a new wife and get new children, who will eventually become my new characters.

Next, I'd like for them to remove the leveling system. I'd want more emphasis on actually doing normal things in the world. Perhaps I'll become a farmer, or a blacksmith? I'd like to be a hunter, and spend my days in the deep, thick forest beneath the shade of the canopy.

No, wait - I'd like to be a cartographer. Because the maps of the world aren't known to your new characters, someone must draw them while exploring, and then sell them to you. That someone could be me. I draw maps on parchment, including important landmarks, good fishing-spots, and dangerous areas where bandits are known to raid unsuspecting travellers. Once I'm in town, I'll sell these scrolls to other players, who, by clicking on a scroll will automatically add it to their map-UI.

But who am I kidding? Let's just wait for our generic MMO.

They should be there as NPC's at least.
Khajiit come in many shapes and forms, this is what people expect to see.
I dont want them as playable avatars, but in the province of Elseweyr at least there should be subtypes of Khajiit.

That's only the one city isn't it? Either way I totally forgot about this. Hopefully they add it in properly.

This isn't going to happen.

they already said that the radiant AI system will not be present in TESO. Instead, look forward to NPCs standing around again doing absolutely nothing ala Arena/Daggerfall/Morrowind.

Probably correct now that I do some research.
Falinesti.

This makes it all the more important that its true to lore, I really dont want a stationary Falinesti that is not in a tree, for instance.

Something as awesome as the following should not be left out of the game:

"Concerning the Wood Elves as a people, we must again turn to the prolific Eric of Guis. After a grateful dismissal from the Court of Alinor, he stayed with the Bosmer for a time at the capital city of Falinesti, during its summer migration. As the city strode along the coastal region of the Cape, Eric of Guis recorded much about Valenwood culture"

That's fair enough - the pahmar and their similar subraces should indeed be represented accurately, but making uniquely and sufficiently customisable versions of every single subraces as player characters would just be more work than it's worth.

Oh - I forgot something else that I need to suggest: cross-faction communication. It'd svck if two thirds of the community couldn't communicate with you and you were essentially closed off from them à la Alliance and Horde. I'd like to be able to run PvE content with players from different factions and speak to them properly. It's a matter of mechanics vs. lore, really, and I hope lore wins in this case.

Hammers that we can carry in the inventory and repair our armor. I hope there is weapon and armor degradation, right?

Yes, youre quite right, this is an absolute neccessity!
I would really enjoy conversations with various roleplayers who happen to be Dunmer, or Redguard, while my preferred race has been Altmer since Daggerfall.

No arrow-to-knee references!

Two seat mounts (horses?)

vampirism and lycanthrophy

Bananas