WoW's "weak" engine is both thematically appropriate (matching the graphics in the actual games it is based off of) and a huge, huge reason towards its massive success. Blizzard does a lot of things with WoW to cater to the average person, i.e. not even an average gamer, and their graphics are one of those things. Very much not demanding.
Granted 5 years later I imagine if it was redone with the same principles in mind it would come out better, but I don't think it would be all that big a difference from where we are now. Changing it to be like every other game with as-lifelike-as-possible models and such would hurt the game's subscriptions. Maybe you (a general you, not anyone in particular :p) would be fine with that but it's not Blizzard's modus operandi behind WoW.
They are coming out with a new MMO, which I expect we'll start to hear things about in 2010. It's going to be different from WoW somehow, though no one knows exactly what they have in mind to warrant stating that. I wouldn't be surprised if they take that one in a direction different from WoW and it's "we want to welcome players who have never played a game in their life" ideology. One game to keep the more hardcore players, one to keep the more casual? I don't know. Vanguard was an attempt at a MMO for hardcore players and that didn't do so well.
Anyway, hrm... remaking games...
Soul Blazer is one of the most underrated adventure/RPGs from the days of yore. SNES game by Enix. You had levels and spells and gear and such to make it an RPG, but it played like the Zelda SNES game. As you'd kill groups of monsters you'd free the spirit of a NPC back in the current town you're at, some which are required, some that are more or less filler to add flavor, and some are optional for secret things. All in all a great game and one I fairly regularly replay.
I think The 7th Saga was an interesting concept, though if I'd remake it I'd definitely make some changes as the game itself didn't come out that great. It was a fairly standard RPG plotwise, but at the beginning you pick 1 of 7 characters to play, and the other 6 are basically on the same quest as you. Some of them will not be friendly! So I like the concept and think it has more promise than it showed in that game, and thus I'd like a remake. :p
I don't know if Majora's Mask, the second Zelda game for the N64, is old enough yet to warrant a remake. I can just go and play it on my N64 so that's kind of silly. But I really thought it was a clever core idea to the game and can probably be explored further. So maybe not remake, but I'd definitely like to see a new game with similar core mechanics! I think a lot more can be done with it!
Edit: Something I'm not too clear on so I don't know about asking, but Baldur's Gate RPGs? Do they work on current operating systems? :p They're definitely a classic. Ooh, and Planescape: Torment, while we're at it... hrm...