The problem: I can't permanently kill NPCs in a MMO, much less depopulate entire towns because the gatekeeper gives me lip, as it will bork quests for other players. I can't create spells or magic items that are stupidly overpowered since they would throw off balance.
I thought about this awhile ago - basically I think it's doable, you simply have a 'balance' server and a 'gone wild' server. You can even migrate your character from one to the other (though when migrating from the gone wild server to balance, you will suffer huge nerfs no doubt).
In the gone wild server, you can kill NPC's and make wild weapons. This server might be reset ever three or six months.
In the balance server, it's pretty much the same deal as a regular MMO - can't kill NPC's, monsters respawn, balanced weapons, etc.