First off, a lot of presumptions need to been tossed out the window. We need to take a step back and look at the strengths of the genre: persistence, community and creativity. We also need to consider some of the genre's crutches like repetition and subscription models. Most importantly, we all need to accept the fact that it's not all about innovation or even iteration but a fine balance between the two.
In fact, it's quite key to rethink traditional payment methods -- and I don't mean by adding in a microtransaction store. The models fashioned by Guild Wars and All Points Bulletin are, in my humble opinion, the most appealing payment style. I say this because they require no monthly fee, can allow very few small content transactions and boost public interest with the occasional (optional) expansion.
Basically, the way I see it working is that between significant expansions a developer can release either free or low-cost content, depending on what kind of content is offered within said update. This will create a good cycles of news, which will keep an MMO in the spotlight and maintain some kind of content flow between each larger expansion. Then, once that expansion is ready to be revealed it goes through the press cycle and hits digital and retail. The trick is figuring out the in-between content releases. Specifically, their heft and cost to both the developer and player. So long as the pricing and depth of content is both communicated well and fair, there shouldn't be any real issue.
The "G" Word
Replacing the traditional grind -- or at least hiding it incredibly well -- is in no way an easy task, but that doesn't make it any less essential for an MMO to appeal to a wider audience. This is already happening with games like Star Wars: The Old Republic and The Secret World, where story and other elements (like puzzles and mystery, in the case of Funcom's next title) are being poised to help alleviate the unpleasant sensation of level grinding so prevalent in the genre today.
I don't know if either BioWare or Funcom are on to something but they both have my attention. Besides, there are plenty of other ways to mask or reduce the much maligned aspect of this genre.
Explore New Worlds
I'll start with a minor adjustment: setting. I know, it's old hat for me but that doesn't make it any less true. A strong, fleshed out setting will always go a long ways to make players forget about a myriad of nagging issues with any game. It also helps a title stand out amongst a crowd of look-a-likes so long as a developer is careful to link their unique setting to equally unique gameplay elements.