You are right. But when it comes to MMOs, it will we veeeery long time till a serious leap in visuals takes place because these games' graphics are toned down on purpose to appeal to a wider audience. So when overwhelming majority of PC owners can run a photo realistic looking game, MMOs will look the way you described.
That may not be much longer than you think. Eve dropped support twice. Once for Windows 98 SE and another for Windows ME in 2005 or 06. They also revamped all thier graphics in 07. Blizzard also increases thier specs as well, dropping support ifor ME and 98SE in 2007. They also increased bare min. spec to P4 1.3-class processors and 512 MB from AMD Duron and 256 MB (which still would run WoW almost unplayable) That is also after only 3-4 years. We are already at affordable 1 Meg cards and the newer Vista machines are at 5 to 8 GB memory. Three years from now, the Win7 machines will be at 10-12 GB with 2 GB video. XP will be phased out. This will be in the next 2-3 years. Those MMOs arent going anywhere. It will be the same ones with one or two newcomers. The graphics will approach cinema unless the dev wants a cartoony look.
Do you think that would be desirable? I know some would like ultra realist games, but I like the small degree of separation between real and fantasy. Some people take things way too serious the way it is, games are supposed to be a break from what is real (unless your into playing "Happy Ending Massage Pallor III: Lotion in Motion). Even shooters... do we want people to become that desensitized to killing another? Flight and driving sims might be fine (and useful), but IMO there can be too much reality.
Well, some of the gore on the TV is pretty realistic. It doesnt make most sane folks want to axe murder folks. I guess you will always have these fruits in any media. Just like some news story I saw about a juror showing up to someone's trial in a Star Trek uniform because she "wanted to represent Federation Values". But, fruitcakes are always around no matter what is there. Video games/ MMOs will become a replacement for TV action-dramas over the next decade. The first of this is sooner than we think.
Yes, I think this would be desirable. As long as you had many choices as to what reality you wanted to slip into and the in-game advertisements didn't get too obnoxius.