That is really a good idea and a good start.
For now most important thing is to get some basics working like, moving, chating, seeing each other and proper structure of packets. After I get it working I would find more people to work with as they see basics are done.
When it comes down to engines, most commercial engines have their roots in FPS genre, therefore have hi-graphical standards, but limited features when it comes down to open world, sandbox and MMO. I fear, that cryengine and even unity will not be any different from this. Most engines have some kind of free/indie license available, even CE and Unity. Take a look at ryzom for a MMORPG under GPL (=> you can use it engines under the given license, including all the network code etc.).
Dated looking visuals are often an issue of lacking budget (ogre/irrlicht) or a result of the original target hardware. When you take the budget of AAA games ( $ XX mio) and put this into art asset creation, it will even look amazing on not cutting edge engines ! Take a look at overdose, it is build with a (modified?) id-tech2 engine !!!