An instanced NM concept sounds intertesting, but I must say I enjoy the open world NM's currently. Heck, just earlier I was running through the black shroud forest trying to light some fires for some quest, and I came across a big beautiful NM doe. I didn't attack her, but seeing a rare creature made my forest run much more interesting. (and also because a small party ran up and jumped her right then..) That's one reason why I like this NM system, cuz it adds interest at random moments.

If SE were to change the NM system, then I'd agree with Speeral's idea and make it partly instanced, and partly open world. Adds variety.