I think the best idea for weather effects is something like Aion 2.0 (or something). A village will be flooded during extreme rain and you won't be able to talk to npcs or anything. A snow will show on the same village during winter.

I understand that that can not be done in major cities, but the "useless" shacks all around or the small towns? that'll be awesome. Maybe you can fish for a legendary fish in a drowned village? or merchants appear only in good weather?