I think a large portion of the problem people are anticipating with a TES MMO could be solved by large worlds with relatively small population caps.
I think instanced dungeons/caves/ruins etc that scale to the number of people in your party (not to their level but the number of people). This allows for appropriately leveled players to clear content on their own if they choose, or bring a friend and the two of them still have a challenge ahead of them. But if you enter an area which is just tougher than you are (or your friend is) then like in Morrowind, you're in a particulalry dangerous situation. . . but of course, the rewards would be worth it.
Crimes should be punished and the punishments enforced (like in other TES games) with fines, resisting arrest, or jail time. Jail time, of course, would be measured in real time; if you murder a whole town, expect to spend some actual days in jail (time to play an alt for a while cause you're main is in the dungeon). As in all the Elder Scrolls games, they should try to maintain the aspects of freedom, but also reinforce the idea that decisions have consequences. Players should be able to report crimes to guards, or at least get a guards attention and lead them to a crime in progress; maybe players should even be able to become a guard of some sort able to enforce the laws (a player commiting a crime in view of said player would be tagged as a "criminal" and the player could attempt to subdue them, call for back up, etc.)
Towns and major settlements should be reset on a regular schedule, that way if someone does manage to kill a shopkeeper they won't be gone forever (maybe the shop closes down so it can't just be looted); of course rather than being the same character, deceased NPCs would be replaced by randomly generated NPC's with the same occupational role but a new name and a new look. This keeps towns dynamic without completely eliminating the feel of being able to make an impact. If someone manages to kill the guy who gave you a quest. . . bummer, but hey, maybe someone will buy that rare artifact you dredged up for a decent price and it won't be a total wash. . .
These are examples, of course, but there are ways to preserve the integrity of the TES games in an MMO format; what it requires is a little imagination and alot of scripting
While I'm apprehensive about such a game, I have faith that the devolopers will do everything in their power to maintain the Elder Scrolls feel.