I think an RPG would be more realistic if it included mood and emotion. Obviously too much realism is undesireable, as the player focuses more on nitpicked details and less on fun. Examples of bad realism are cleaning weapons, wearing clothes (besides armor), sleeping, and a realistic-sized world with corresponding travel times.
However, some realism is good. I think you should be required to eat in a roguelike, and poison, bleeding, and other status conditions are good. Some level of abstraction is required in a game, though; the game would not be fun if every attack caused bleeding and every sickness required a different cure.
Anyway, back to my point: I believe mood falls under the proper level of realism. Gearhead is the only roguelike I know of that uses mood, and it only affects the player's stats (maybe conversation as well). In the best possible case, the player will feel whatever his character does. For this to occur, the character's attributes must be important and easily alterable.
In ADOM, one can have a pet, and Bards start out with one. What does the game say when that pet gets killed? "You are horrified by the death of your friend!" Ok, great. You've lost an extra 3 points of damage each turn. Horrific. The player would feel much worse, and in turn empathize with his character (remember, this is about role-playing) if that death had a greater effect. If his character had improved stats as a result of the pet's emotional attachment, or conversely had decreased stats as a result of the loss, the player would feel more frustrated at this event. If the pet represented a good deal of help for the player character, or had some intrinsic value, the response would be much more severe. Suppose this pet was surrounded by goblins and killed. Since this implies serious gameplay problems for the player in the future, he is likely to be frustrated or even angry, as his character is. Maybe the player will find some relief in the merciless slaughter of every goblin involved. The player character may have difficulty interacting with peaceful goblins after the event too. If the character cannot talk to goblins (in the interest of receiving aid, bartering, or getting quests), the player will attribute that to the goblin incident, and feel a similar frustration and/or regret at the event.
The weather and/or environment should also have a substantial effect on the player character. Imagine how you feel if you were trudging through a blizzard and happened upon a warm inn with good food and good company (there's no weather to speak of in roguelikes either, but that's another matter). The inn needs to have a significant reward in order to give the player a truly happy or relieved feeling. Maybe wolves are easy enough to avoid in general, but the can attack unexpectedly as a result of the reduced visibility caused by the blizzard. The character would be safe from said wolves in the inn. Maybe certain companions could be incapacitated by the cold, and are revived once they are in the inn.
Quests should also change the character's mood. If rumors are constantly circulating throughout the game of a "pure land" where only the the most noble and honorable people can ever hope to see, much less go to, then a late-game quest that allows access to this land will provide a feeling of accomplishment for the player. Generally, the more exlusive the area or reward, the greater the feelings will be from attaining or losing it.
I realize I shifted from character emotion to player emotion. However, I think player emotion is more important. Character emotion is just a medium for the players to experience corresponding feelings. The example in the last paragraph was derived from my experiences in "The Secret of Mana" (SNES) and Runescape (PC). There really is a Pure Land in "The Secret of Mana", and getting there means you are *very* close to winning the game. It is always nice to have a tangible progress indicator like that. In Runescape, there is a quest that gives you kingship over a small, secluded island. The people there work for you and give you resources. The island itself is accessable only to members, and then only after you have completed several semi-difficult quests. I remember ever since I started playing I wanted to go there, and once I finally did, I experienced an incredible rush of satisfaction and accomplishment. This is probably not normal; consult your physician if you experience similar effects :-).
Anyway, the point of this novel is that thought should be given to different ways to immerse the character in the game. The problem with several ideas is that it is complicated, and it could work too well. You don't want the player destroying his computer or quitting because of a seriously terrible game event. Conversely, you don't want to give the person a "success high" too often or the effects will wear off. This is the complicated part I mentioned. The player must be able to recover from bad events, or the game will cease to be fun. The good events and bad events must balance each other in possibility frequency and amount. Finally, there needs to be very detailed and very deep game content, or the moods and emotions the player and character experience will become repetetive and lose their impact.
Anyway, those are just some ideas I thought I'd bring up. It's a little too complicated to implement in my roguelike (though I think it would be a great idea in a sequel), and also probably too complicated to be used by a single independent developer. Nevertheless, it would be great to see in any RPG in the future.