One of the first things I noticed when I migrated from Final Fantasy XI to World of Warcraft six years ago was the lack of collision when running through another player character. In many MMOs, characters and NPCs are treated as solid objects. As a result, PVP and PVE are more dynamic and challenging, but this also causes problems when there is an enormous crowd in front of the auction house.
There are many pros and cons for collision detection, but I think Blizzard was smart in keeping it simple. With World of Warcraft's tens of millions of players, events like The Gates of Ahn'Qiraj would have been even more hectic if players could not run through each other. Bosses like Valiona and Theralion in The Bastion of Twilight, where you have to stack up (for the Meteor) would be so much more challenging if stacking up took collision detection into account.
On the other hand, things like PVP would be much more engaging. Imagine Warsong Gulch in a game of Capture the Flag. Players would literally form a barricade around the flag carrier and protect him until they die. Honestly, I do not PVP much, but I know this would change up the dynamic of the game greatly. As for whether it would be for the better or for the worse, I will let you guys decide in the comments.
What are your thoughts on collision detection? Do you like how it is right now, where everyone can stand right on top of each other and run through players? Or would you rather it be more solid and realistic, but possibly more frustrating?