Ok, I can see that the grind has it's reasons. But I still feel it's not the optimal solution, and that similar or better results are possible in other ways.

Now, before I can put this thread to sleep I just want to recap for my own sake, and see if there are some final suggestions.

Question:
What would be the consequences of having characters with little or no progression in an MMORPG, both good and bad? And; How to offset the bad consequences?


Answers:
Less for players to do
Grinding is a big part of what a current MMO is, and that has to be replaced since no progression means no (reason to) grind. This is a big con and what most of the discussion has been about. The optimal solution would be a totally dynamic world similar to the ones presented by a GM in a PnP RPG. This is not feasible though. The negatives can otherwise be partially offset by minor dynamic elements in the game, a good PvP environment and ingame politics. No 'full' solution has been suggested.

Easier to make strategic gameplay?
Since you're not required to invest a lot of time in your character, you can afford to experiment more with the type of character you make. Another beneficial side-effect of this is you will possibly see less cloned characters. One problem is that when game challenges are meant to mean more and be strategic, it demands more from the challenge itself such as greatly improved AI and so on.

Opens up for permadeath or other character death conseuences
For the same reason as above, loosing you character is at least feasible, since you're not loosing all the time spent on the grinding treadmill. This in turn can make accomplishments in the game count for more than just a measure of how much time you've spent ingame.

Any final comments to add? Thanks for the replies so far.

I'm glad this thread went so well. I think this is a very useful conversation, and your summary is a pretty good description of the situation. Cheers.