I have occasionally considered that a lot of the problems associated with MMORPGs is the 'massive' part. It's interesting, because being 'massively multiplayer' seems to be what attracts people in the first place, and then a lot of the complaints about the games are because of all the people. They are either griefing, spawn camping, gold farming, kill stealing, role-playing badly, ninja looting, or generally just being gits. On top of that are the complaints that the end-game instances require so many people, indicating that players don't want massively multiplayer content. Considering that most of the interesting parts of the game are 'instanced', shut off from everyone except the current group of players, a tiny proportion of all those on the server, it seems that getting rid of the people would make the game significantly better. There are also issues with the games' subscription models, in place mostly because of the servers the company makes available that are necessary to play the game. But there are games that are multiplayer and require servers to run that don't include a subscription, and don't require hundreds of people around to make life difficult, so why not World of Warcraft?
Imagine Blizzard releasing a server edition of WoW. You buy it, install it, and you have a WoW server, ready to be played on. You can play it solo, or invite friends to join. It has a one-off cost to buy the software, and then any expansion updates, but no subscription to run it. Many casual gamers seem to play a weekly group, where the same characters are only used in that group and they can progress together, and solo or play in smaller groups also with friends at other times with alts. A small server that allows only their friends to join would barely affect the gameplay for this kind of casual gamer. Someone who plays a lot of solo content would hardly notice the difference, apart from being able to find named mobs and other spawns more easily. The more hardcore and PvP players could play on hired servers with better latencies and with a more open policy. It worked for previous games, after all.
There would be issues. Towns and cities would be empty of players, and there would be little need for an auction house. The huge range of random loot could be scaled back to leave more useful drops. The grind for materials could be reduced, although the professions could remain the same, perhaps allowing for one character to learn more professions instead of having to rely on alts or friends choosing separate professions. Perhaps the most important issue is finding new players. There can be few players that haven't met good new players in a game and started playing more regularly with them, and having closed servers limits the new interactions drastically. This could be mitigated by the proliference of gaming blogs that can spread the word of good servers or players, and a real community can be built instead of the artificial munging together of players that is created by picking a random server from a list.
Characters can be stored locally, so you can take them from one server to the next. Issues of cheating or hacking can be solved by server admins or trusted players, banning the bad players. Characters really become the focus of the game, the heroes of the world. When you rid the Deadmines of Van Cleef and Stoutmantle cheers your group, you won't feel silly when he cheers someone else two minutes later for the same accomplishment. When you clear out the Scarlet Monastery and pluck Whitemane's Chapeau from her head it will be (almost) one of a kind, and you won't see dozens of others running around each city wearing one.
I'm sure I've oversimplified matters, and there are doubtless issues that I've overlooked. It still interests me to consider the possibility of private WoW servers, or those for other games, that allow friends to be the heroes of the world, to remove the douchebag from the MMOG equation. Do people really want massive games where everyone is a hero, thus no one is, or where few people are heroes and there is a risk that you are not one of them?