well, this more like a conversation.
I don't agree on the AO. It is generally very good for every kind of object in order to represent better in 3d space. Even a box look like two times better with AO than with simple lighting. BTW this is what about the book I am writing. Lighting - represeting objects in 3d space.
So even a simple model in my opinion look much better with AO. But I understand you. It feels like an attachment to traditional 3d shading because you like it better and it is faster.
Burning the ao into the textures does look good for static parts of the model, and maybe some animated parts. But SSAO does it better even if it is lower resolution.
Realtime ao, gi, caustics are already knocking into the game engines. Look at the Siggraph events, videos. Its awesome what they do and how those models look with these rendering methods. The games too.
Well I dont want to spend more time on this. I mean no disrespection with what I wrote. I like the game because it is well playable. But I would love to see more people playing it (so we can have more fun) and well you know all those what we already mentioned. It is rather a suggestion than a push even If I like it that much...