Okay, before I say anything I will say that Ryan Dancey is a mental furball. If that sounds unusually personal, let me be clear: this is the guy who pretty much decimated TSR's old holdings. Back in the day I was on the old RPGA forums and ran into this goober who made a lot of promises about what D&D 3E was going to be like as far as compadibility and such. He even told me that I could create any 2E character, even breaking the rules as long as the mechanics were intact, and have it translated almost verbatim to 3E. Needless to say he failed and then tried to recant this publically. This is the guy who also gutted "Alternity" in favor of the D20 "Star Wars" liscence, claiming that the failure of the last couple of craptastic supplements which were rushed out due to personell transfers as the reason despite the moves apparently already having been made. He also claimed on these forums that if Planescape: Torment was a success there would not only be a sequel, but the Planescape world setting/product like would continue. Needless to say he took a giant crap on that too.
True stories here incidently, I pretty much dealt with him personally (well as far as the internet goes) and even had some pretty substantial threads going back in the day as a result of dealing with this guy. Simply put he's a liar and a complete blight on the RPG industry. The kind of corperate toad who really had no idea about games of any sort, and thrives on destruction as he takes an axe to everything around him in hopes of making a few pennies for the people above him.
As a result of this, you can pretty much ensure that whatever Ryan Dancey says about gaming is pretty much wrong, and any promises he makes aren't going to come to pass, much like Peter Molyneux, but without the good intentions.
What's more I'd point out that what this guy presents isn't exactly new, he's actually talking about bringing MMOs back to the old days of things like Ultima Online, or Star Wars Galaxies where games functioned very much like he mentions. This approach was abandoned because it's generally impractical for the reasons mentioned in other posts: what happens when you run out of space, everything is claimed, and resources dwindle to nothing? Ultima Online had to abandon it's "resource bank" early on, and demolish people's houses en-masse because almost literally every piece of land that could be built on, had been build on. SWG for all of the fond memories of the early days suffered similar problems where as soon as you'd leave the city limits you'd hit something akin to a barrio with player dwellings as far as the eye could see, and this caused problems with both spawns and resource scavenging when you literrally couldn't get to anything because chances are it would put you in another player's house.
The sandbox style of gaming is probably seeing more developer appeal right now, not because of any kind of "evolution" but because it's potentially one of the best ways to make money for a "free to play" model, the nature of the game puts no real expectations on the dev to deliver content, and things like building lots and such can then be sold piecemeal.
Player created content is a nice sounding idea in an MMO, but it's always going to be limited because in a FTP model publishers don't want players to be able to make anything worthwhile because that cuts them out of a sale. Looking at things like Star Trek Online's "Forge" you generally don't see any kind of decent rewards since players can't create and distribute items (for game balance reasons) and everything basically turns into a linear "kill this stuff with exposition explaining why your killing it" hack fest, recycling the same materials as everyone else because players for obvious reasons can't add anything to the game (new monsters, models, weapons, etc...).
The problem with the theme park MMO is the expectation of content, the games fail when players complete the content and then don't want to pay anything else until more content is created. Publishers don't want to have to meet these kinds of support requirements, and maintain an endgame. A sandbox is a potential solution to that problem from their perspective, going back to the dawn of MMOs, where it failed in the sense that they want to use it.
Now, don't get me wrong, ideally sandbox elements are good, but only when combined with a truckload of dev created content as well, and continuous updates and additions to the core content.
What's more to make sandbox elements work, your going to need to see a LOT of innovation to prevent the problems inherant in overdevelopment, while still retaining an open-world enviroment wheere players can find and interact with the developments of other players without having to enter a special seperate "building zone" (ala Age Of Conan).
Maybe Ryan Dancey will prove me wrong and redeem himself, but really, I suggest you interpet anything he says in the worst possible way. He was the face of burning (A)D&D fans, and with my experiences is totally untrustworthy. There are maybe two or three other people in the industry that invoke the level of ire from me that he does, and despite how it might seem, I'm actually pretty laid back. I can't see the nessicary innovation coming from any project that has him acting as the face.
Plus, as I said we've been here, without some massive innovation all you need to do is look back at Ultima Online (early on) for examples of how this all worked out.