Yeah I can see why OP thinks this is start o decline, in many ways I think it were, lack o character creation, lack o classes, lack o deep stat relevance such as you see in Torment, Arcanum an Fallout, even lack o camping mechanic that we saw in V, lack of morality meter etc.
Then again the positives are equally strong, living world that makes even modern Elder Scrolls look a bit shit in comparison, day and night schedule that actually had enough shit happening to merit your downtime being rewarding, NPC schedules and characterisation that once again piss all over Bethesda, environmental interaction whereas most modern games are just characters on painted backdrops, masses o interesting things to do outside combat, themes and narrative that are both interesting and philosophically quite fucking deep, spells that change how you can play game and are interesting and mighty, no loading screens, magical items that are useful and once again change gameplay, masses o methods o getting around from various forms o teleportation to magic carpets, wagons, and o course shanks mare.
Another thing that I loved were inventory, simple an intuitive because it were almost exactly like reality, so it came easy to anybody who used it. You carry shit in your hands if you've got nowhere to put it, but put on a backpack an you've got a ton o space to use, add a few bags and you can further sort your inventory. Requires management to keep on top of it but preparing yourself for all shit that comes wi trudging off into wilds o Britannia is only fair and reasonable, an you'd be an idiot not to. That an you could craft a homebase organically, you dint get given a stronghold or owt, but you could collect chest and keys to lock em, store your gold an artifacts in em, an create a supply depot wi food, drink, an all your needs to stock up on.
Also exploration in U7 were fucking top notch, heading off into Deep Forest, from Iolo's Hut was an adventure and a challenge, and you found interesting shit. An plumbing all the old dungeons was great, especially ones that weren't on critical quest path, just optional content that'd be cut on a modern game. An this exploration an adventuring, no fucking quest markers, no mini map, you had a simple feature once again taken from reality, a map o realm an a sextant to pinpoint your position that dint do shit in a dungeon. Players were not treated like a fucking incompetent child for once, they were trusted to be able to do shit an think.
Mixed things i'm not sure are decline or incline are romances, an U7 were fucking chock full on em, an years before Bioware trumpeted about its characters being able to be bi, gay, lesbian or whatever, U7 had your Avatar free to screw who he or she wanted to in various places and it dint even raise a single eyebrow, it were taken as normal and not even commented on. It were treated like sexuality were in Obs NV, no big fucking thing, but did it spawn Biowares sickening and cloying insistence on everybody forcing themselves on you an trumpeting their private shit all over, who knows, might have.
All told i'd say positives outweigh negatives, and I fucking wish a lot o modern games'd try what U7 did, cause they seem to be stripping down an abstracting almost everything outside combat an graphics, an being cheered on for delivering less an less content. Wow wrote a lot.
It starts going to Minecrap territory now.
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