Continuing on with what I posted yesterday, I know there would be a couple issues trying to graft a 3d engine on the current UO world. A real one, not the one we saw with 3rd Dawn. Perhaps more than just a few problems too........
But I don't see anything that would outright prohibit it. The world might need a bit of changing so it isn't full of flat forests with trees laid out in unusually symmetric patterns. Perhaps the 1st person would only be available inside dungeons and buildings. I see this type of upgrade as the easier of two paths to restart the game. The other being a huge effort to bring 1997 isometric graphics to 2009, not 2001 which Kingdom Reborn tried to do. Even then, if that was the only upgrade performed the developers would need to combine it will a huge amount of game play enhancements in the all realms: PvM, PvP, sailing, housing, crafting, etc. Every single system would need a new and involved feature.
For UO to reverse its decline, you need something compelling to draw the attention of every MMO player out there. There needs to be something enticing them to at least give UO another 14 day trial. It all needs to go in simultaneously so when you login you see lots of other people playing with you.
The Stygian Abyss has the potential to do this. That is quite a big if there though, considering we have little idea of what is going on. At the moment it sounds like an average UO expansion. New dungeon(s), a couple new skills, a new system to revive crafting, etc. That is not going to cut it by a long shot. It might help maintain the status quo, but it is unlikely to turn subscriptions around.
As far as expansions go, the last two sucked. The most recent Mondain's Legacy was billed as a return to the game's "roots". Virtually everything about it failed. Recipes are nothing more than an one time annoyance, crafting quests in Heartwood are all "make x and have a 0.01% chance of getting a good drop", and the whole elf thing was just a marketing ploy to begin with. It didn't really "expand" the game at all. The same thing with Samurai Empire. New lands and two new skills which had a pitiful amount of abilities. It is no wonder players have lost interest in UO over the past 6 years. The game has gotten absolutely stagnate in terms of content additions.
If you go look back at the patch notes from 1999, 2000, and 2001 it appears they are doing stuff every single month. Not only that, but there was already so much stuff to do that you didn't hang off of every publish. It just added to your list or fixed stuff. In the past 2 years the majority of publishes have been to either fix/launch the Kingdom Reborn client or event related. The problem with events is they are short term.
I think I got a little off track in this post. I'll just end it here and try again another time.