Thank for reaching out. I really like the concept and it sounds fun. I really like the idea of guiding players to be nice to one another so I leaned into that a lot with my ideas. I hope you will lean into it too, it's a fun way to run things!
1. Party diamonds. Sell for real world cash a diamond that throws a party and rewards all players in the area. Getting players to dance and party with you can help the user of the diamond in some ways. This will encourage players to organize a fun event in game with their friends or strangers.
2. The game is real and the real world is fake. (Or an evil wizard did it!) The story is that an evil wizard fragmented reality to make it look fake. All the people detach from reality and become like animals so that he can control them. In that way the player "is from Earth", but according to the story, Earth is just a fantasy and the game is the real world.
3. Players are monsters. All the monsters are actually people that are disassociating and you don't kill them, but suppress them until they wake up. Could be a fun mechanic if each player becomes a kind of monster of themselves like a werewolf when they are logged out. "Killing" or suppressing them could help them rest better when they come back online.
4. Players write the story for their friends. When each player finishes a quest, he is given the ability to write the dialog for that quest. When each player starts a quest, the dialogue is pulled at random from other users, with a heavy preference for friends. Might be hard to moderate this, but if you can pull it off, it would be super fun.
It kind of makes sense if a wizard has twisted reality, each person is trying to help find the truth of how reality works and make it real again. (Hint hint, immerse your friends!)
5. A friendship based skill tree that gives you abilities you wouldn't normally lock up like the ability to have a friend list or send mail or emojis and weird stuff. It would put the community stuff further at the core of the game. Also this can help with moderating spammers and ad bots.
6. Crafting/home building dynamic NPCs. You said you wanted a custom home for each player and deep crafting. I suggest you roll those into one thing and randomize NPC spawning at the players home depending on what stuff he has placed and if it's cozy and such. You can also tie the crafting into the player home as well to make it feel like a tight system.
I guess that was six, but I like your idea and wanted to explore it a bit for my own fun.
Let me know if you want to hire me for some more serious and thought out ideas. Right now I'm mostly doing this for fun and to build up a portfolio, but I can go as serious as you want. I can do a lot better with a deeper look into the actual game and getting to know you better so that I can make a cohesive whole rather than just these quick ideas.
Either way I hope this helps you get back on track!