In at least 3 other threads on this subject, I remarked that I'd like to see a bigger world, using procedural generation to place content, but then reviewed and hand-tweaked by a real live human. I don't trust a computer to do everything and have it look "natural", but it can do 95% of it properly, and fixing the other 5% should take a lot less time than doing everything by hand. Daggerfall's biggest problem with procedural generation was that most of it was not reviewed and corrected after generation, so various anomalies like inaccessible areas and monumentally stupid arrangements of elements were not only possible, but relatively common.
The second problem with DF is that it used relatively bland, blocky, and repetitive elements in the first place. Even its hand-placed content wasn't exactly spectacular looking.
Morrowind had several far larger and diverse sets of "tiles" for building interiors and exteriors, and a wealth of individual smaller pieces which could be used to build up unique content or extensively alter the standard sections. The net result was not only more detail, but a lot more possible variety in placement.
Unfortunately, OB didn't have the same variety of pieces within a tileset or the range of individual elements, so the dungeons tended more on the "cookie cutter" side. Clutter helped hide the fact, but I couldn't help but notice the same broken step on every flight of a staircase, the same chip on the wall trim every so many steps, the same crack in one floor tile in a group, etc. A procedurally generated layout needs a bit of human "TLC" after the fact to customize a few things, and remove the obvious signs that it's just another of the 1483 examples of the same old "tile". Add to that the fact that a few "alcoves", jinks, dead ends which served no purpose, and other anomalies were not manually removed or cleaned up after being generated, and you have another example of "how not to do" procedural generation. Granted, the dungeon layouts which were used were selected from a larger group, and the most blatantly "silly" ones discarded, but they still needed a bit more work, for the most part.
"Speedtree" was apparently used to procedurally place trees and plants, and I don't have an issue with it, other than the limited variety of tree "types" for different environments. It did what it was told to do well enough, which was to fill in "another generic happy forest" with more of the same trees and plants.
I think procedural generation could be used to create masses of "peasant" housing to produce a city that actually LOOKS the part, with some degree of variation in building interiors and exteriors in case you want to explore a few at random, but any "meaningful" content would still need to be done by hand. Picture 3 different house "layouts", each with 3 different beds and three different pre-arranged tables and chairs to choose from. Each house may or may not have a set of shelves, a fireplace or a stove, a storage chest, a separate chair, a nightstand by the bed, etc. The specific items on the table, shelves, etc., could be chosen from a list, so one house might have yellow glassware, another green, and a third could have metal cups and plates, which would be placed according to the pre-defined arrangements above. You could look at 10 houses and see a totally different combination of elements in each, so they'd look unique. If you checked out 100 or more, you'd start to see the "design rules" behind it, but there'd be little point in investigating that many without some specific quest or reason to do so. Good enough, and a fraction of the time spent to crank out 500 houses as you'd take to make 100 houses by hand. The designers could split their time between a quick inspection of every interior generated and hand-tweaking about 5% of them to make them a bit more interesting and unique for those players who insist on seeing ALL of them, or for the few which you might visit on a quest. We could have "cities", not villages with fancy titles and illusions of grandeur.