I've seen this idea done to a small extent (mainly in terms of affecting characters not the "world"). What if when a player played an RPG they could "personalise" the world the more quests that they resolve. Examples that I have seen > choosing the name of an RPG character's baby, choosing whether to build a statue or a flower bed. But what if the player could have a lot more influence on the world, deciding where to build towns, getting them to build a medicine hut (produces cheap health potions) or a blacksmith's shop (better quality armour). Or building passes so that people can have a trade route through the mountains. (I know that Dark Cloud / Summit has a 'Georama' mode where you can place towns but that just sounds odd, what benefit is there to the player)? The more that the player feels they have influenced the world, surely the greater personal attachment to it?

I agree, this type of "sim" play has been overlooked. My brother and I discussed this type of idea a couple of years back. We had come up with a heirarchy system , that could be applied to the 'lone adventurer' that hires henchmen or you could own and run a tavern ... all the way up to running a village.

It was interesting and I think this sort of having a large effect on the outside world has a huge impact on feeling like you are not only a key part of the game but directly influencing it and the games outcome. I think this is what MMORPG attempt to do but IMHO they fail miserably.

I think infuencing the plot is more important (which could change the world but not directly controled by the player) is more important. Unless you want to integrate a litle sanbox in your game which could be fun, but I don't think it would add much to the overall game.