I do rather like the bit in the "confirmed features" thread about not having the usual loot system, whereby most of the items are junk despite being enchanted somehow.
I think that shouldn't happen. In Morrowind, if you clear out a cave or a ruin it remains empty forever. This made the game even more of a wasteland than it already was.
If guards in a city are killed it would make sense that the city hired more.
Well, presumably that's just a side effect of having non-respawning enemies without considering the effects of that. It's fine to have a desolate world, devoid of enemies because they've all been killed, just embrace that in the design.
The main thing seems to be timescale of respawning. Maybe if you've completed the quests, you should be able to do a timeskip; "The world is at peace, you hang up your gear and embark upon a 5 year pub crawl as the nation gratefully buys you drinks.
5 years later, word of a new evil reaches you, you pick up your sword again and notice none of your old armour fits any more due to the beer gut". The world has aged, the trees a little taller, the vines a little thicker on the walls, your character has a few more grey hairs. Do it a few more times and your character is just too old for this stuff anymore (think Old Snake in MGS4), and the control switches to your son/daughter who has just come of age.