You have to remember that the average MUD usually had a few dozen, or maybe a few hundred, people playing at any one time, and the "world" was very small. If something was happening in Market Square, everyone would pretty much know about it.
However, there are literally millions of people playing the big MMOs, spread across huge game areas. A GM could be taking over a well known MOB 24/7 in Ironforge and most people would never know it.
Besides, the reason the admin taking over a character was amusing was because the non-existent mob AI sucked so much, it was just refreshing to actually interact with a non-player character.