There are plenty of other games that came out in the past 10 years with clipping issues. GW2 for example.

Its kind of beside the point. Frankly overhauling the engine to have a more advanced physics engine, assuming that the existing game engine can facilitate such an upgrade, is probably far from cost effective for the benefits. Most games with equivalent physics engines launch with them as a core part of the games structure rather than trying to integrate such a system at a later date. With major engine overhauls its usually easier building from scratch than retrofitting. Too many moving parts could be thrown out of whack. Frankly I would be highly surprised if it would be worth the investment of resources and there are things for the game I would vastly prefer they spend money on.

I would also point out that while your system can handle it, other players systems might not. MMOs generally have to pander to a very wide audience so they are careful to allow a low minimum spec.