As JiK and Raph have pointed out, if you go back to text MUDs then people did have emotional engagement with some NPCs. (I know you know it, but most people seem to forget/not know that there are well over one thousand functioning text MUDs still in existence.)

It actually discourages going out for hours upon hours and mindlessly grinding away to get to the next level. Quests can be done easily for the most part and are fun. Since quests often give spells and experience as rewards, you can level up off of them and get stronger for when you DO want to go out and grind. Also great about this game are the graphics, they are without doubt the most amazing of any free MMORPG I've seen to date.