Actually I've had several newbies tell me they just can't continue because it's so "ugly". Even when stated in the same breath as "This world is so empty, where are the players?" or "The combat system reminds me of RuneScape" (this particular comment was before the improved mob AI, which while a step forward, probably still isn't enough for player retention), they still seemed to find the graphics to be PlaneShift's most egregious sin in their eyes.
As for MineCraft, it's deliberately simple with a style that's evocative of nostalgic 8-bit games. The mobs are even kind of cute, when they're not blowing up your build or knocking down your doors. It just works. PlaneShift, on the other hand, is trying for a realistic look and, admittedly, often landing in the wrong part of the uncanny valley. Most of us have grown used to seeing the models and maybe even don't think they look that bad, but a new player seeing them with fresh eyes wouldn't think the same way. Add to that it sometimes takes lowering the graphics to the point where the textures look like Impressionist paintings, and yeah, I wouldn't take a second look if I didn't know about the RP community.
Getting back to the actual topic, the closest I can think of to Sarras's vision is either Second Life/OSGrid/etc, or QWOP. I think it's safe to assume she's talking closer to the former, except without having to use external programs to make your own animations and poses. It would certainly be an interesting idea for PS - admittedly I'd probably spend a couple hours putting my characters in impossible positions just to test the limits and maybe get a laugh, but it would also greatly enhance the roleplay experience.