Also, the engine has the added benefit of being friendly to older hardware and offering high performance even in extreme 25man or 40man situations.
The only thing that players probably mean with this kind of criticism is that it doesn't look "photo realistic" (which is also by design) and doesn't have all the latest and greatest DirectX or OpenGL features in it. But do you want to play a good game or do you want to play an interactive graphics engine demo to show off what disproportionally expensive hardware can do?
Also, photo realism in games is overrated. In many cases it's even bad because it reduces visibility. Blizzard games for example would be terrible for competitive players if they had too realistic graphics. There's only so much you can add before it starts becoming visually cluttered.
WoW's art style (and in general Blizzard's art style) almost never has this type of problem, making it a joy to play even in situations where a lot of stuff is going on on the screen.
Also, there has been some research that showed that when virtual persons became too life-like in appearance, that viewers actually disliked it because it was never 100% close to reality, and so the viewers felt that it was weird instead of great looking. This means that the viewers actually prefered a graphics style with the purpose of NOT looking too realistic, because either you make it 100% realistic or not at all, if you just come ~90%+ close it will just look weird.
TLDR: WoW graphics are amazing, art is amazing, engine has high performance, photo realism is often bad and never makes a good game.