I came across this fascinating article chronicling the rise and fall of the Queen of Chu, a player who ran a player-run kingdom in the Chinese MMORPG ZT Online. The article is fairly long, but well worth the read.
For the record, I actually do support some forms of microtransactions in games. That being said, there is, obviously, a fine line between effective and exploitive, and who defines where that line lies is itself a minefield.
From a design perspective, however, what is more interesting to me are the design (and business) implications of these various approaches.