Could it be done? I'm coming down hard on the side of YES. Would it be unbelievably difficult to pull off? Most certainly. Could a console MMOG be really, really good? Well, why the hell not?
Particularly in light of Tera, a game that plays more like an action-RPG; like a slightly lower-energy version of Devil May Cry, only with a great deal more emphasis on the RPG part of the game. I know I'm about to mention an obscure game, but for anybody who's seen how the battle in the more recent Ys games works, I think that's probably the closest approximation to the battle mechanics of Tera.
But, of course, the big question is: What are the odds of a console MMO game actually happening? Unfortunately, the chances are pretty low. See the Extra Credit episode on MMOGs for part of the reason: MMOGs seriously cost. Another part of the reason, well, I'm afraid that's where we, the consumers, come into the picture.
Essentially, any "big" console MMOG is goin to be experimental, no matter how much beta testing goes into it, and we're not that big into investing in experiments. The only way a console MMOG could be guaranteed to sell well would be to base it on an established game franchise; Halo, Zelda, Metroid, and so on. BUT this brings up yet another problem, that of the developers taking the gamble on making the game based on their good name. Let me put it this way: E.T. was a blockbuster movie, loved by everybody, but the game... you get my point.