I have a long post about AoC coming up that's mainly waiting to be dolled up with screen shots to illustrate some of my points. However, I stumbled on this story at Gamespot and thought I'd pass it along.
I have often cited the Elder Scrolls: Morrowind as an example of a sandbox done right. It gives you incredible freedom, while also giving you a compelling series of quests and story lines to follow should you care to. I am skeptical that a design with so much freedom would work well in an MMO. For example, how do you balance a game where anyone can design and create pretty much any spell or magic item they can think of? I think the answer is that you can't, and that the game would have to be a lot more restrictive than it's offline counterparts.
Still, if Bethesda can give us the first sandbox MMO that is a game first and a sim second, I think I will be pretty happy with a product that is "only" as open in its design as UO or EVE.