And I'm loling at the posts that say "RPG = IMMERSHUUN!!!", mostly because they seem to be coming from newer players that have no idea what an RPG truly is (coming off of Mass Effect and the like).
That being said, an ideal RPG in my mind would have the perfect balance between stats defining your character and environment and lore pulling you in. The earlier Elder Scrolls games (Arena and Daggerfall) were too stat oriented (though graphics were not nearly as good as they are today, so what could they do about it), and Oblivion seemed to be aiming too much at visuals than RPG elements, something which Skyrim seems to be plowing towards. And I know it's typical that this is being said, but Morrowind was a close to an ideal RPG as one could get. The art and visuals for the time were astounding, drawing many players in, and the skills and attributes still played a prominent role in defining your character and still mattered in different aspects of the game like combat, diplomacy, thievery, what have you. The only downside to Morrowind was the craptacular combat system, but then again, what else could you do at the time?
No one truly knows what an RPG is. It's very clear, especially on these forums with all the craptastic Daggerfall vs. Morrowind vs. Oblivion and Fallout 1/2 vs. Fallout 3 vs. Fallout: New Vegas "debates". People
think they know what an RPG is, think everyone else is wrong, and continue believing what they believe without a shred of evidence. I've never played a Mass Effect game, while I am at it. As for immersion, yes, immersion is kind of the point of playing a role, or role-playing. Immersion must be coupled with progression in power and influence, in my opinion, and that means I support the more realistic system presented by games that don't use those, in my opinion, awful dice rolls and permanently set classes. In addition, what you perceive as downsides to Morrowind, Oblivion or any other game are just that, what YOU perceive as downsides. Combat isn't my only problem with Morrowind, and neither is just graphics, or the fast-travel system, or the pace, or the, in my opinion, bland side quests, or the lack of buyable houses, or the limited containers, or the, in my opinion, non-atmospheric dungeons, or the lack of variation in gameplay, or the stealth system, or the, in my opinion, pathetic implentation of fatigue, or the low amount of interaction, or the leveling system, which I hate in Oblivion, too, by the way. No, no, no, I hate many, many things.