Congratulation, now you have given it to us; you postet something that many parrots before already said before too. Sadly not even the LOL is unique, somebody on site 2 already posted it.
And most others do. WoW is still so popular because of it's graphics. It's quite timeless, and compared to 15 years later it's still not entirely outdated. Even more, WoW back then was graphically very up to date. Look at the time WoW came out: it was 2 years after oblivion, a game that was graphically so extreme bad and still got sold. Half Live 2 came out and was graphically not much better than wow is. Even back in Vanilla WoW had some hidden settings that could make it look so well. Especially the grass you could turn it up to an extreme high level with some console settings.
Now in Classic we got many, MANY changes in the graphics-section: Shadows for example.
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I think the biggest issue with transmog on the live-realm is that it can't be disabled. Yes, here even Transmog would not change anything, AS LONG as you need to enable it for yourself. But here it could actually come to some gameplay-issues; especially when some have it enabled and some don't, that's for sure. So i would also be against a transmog-system like we have it on classic.
But as you said: what i would like to see is a transmog that works only on your character only and nobody else can see it; it doesn't matter what you see, as long as only you see it.