History is somewhat 50:50 on this: On one hand you have Aradune strutting around like a peacock with his flaming sword (claiming it is obtainable), on the other hand you have the original WoW dev team, which were EQ veterans who thought they could do a better quest based MMO than EverQuest. Turns out you can, and the finger on the monkey's paw curled.
The current generation of "player turned MMO dev" is pretty bad though, with examples like Curt Schilling and Ion Hazzikostas. I think the trick is to have firm leadership that was a game designer first before starting to play MMOs.