Current generation MMOs are pretty static in that choices don't really affect the world for more than the scope of one or two quests -- but that doesn't give you a good sense of immersion, simply a temporary task.
I've had this idea of an MMO where whenever you make major decisions (such as burning down or sparing a village), you get teleported into an instanced version of the world with your changes (the village is burnt, the peasants are killed, etc) along with other players that have made the same choices.
The problem is that this requires a very large amount of instances, and players will be extremely fragmented and sparse throughout the world -- except in those areas that cannot be changed (for example, a central trading post.)
How do you solve this fragmentation problem, allowing more social interaction among players? It's hard to have an MMO with millions of players, each making different decisions.