Let me take my stab at speaking for the fan base, as everyone else has. I played every Ultima, and as I think we can all admit, even those with very tight art direction couldn’t be considered photorealistic. As such, I think we are all OK with the game not being photorealistic as well.
But here, I think, is the dissonance: Your team has been primarily focused on developing realistic game interactivity systems; a world simulation. As such, I think a lot of backers have come to expect a certain seriousness from the game. When the art assets have cartoony proportions, like the sword, door, and skeleton, it clashes with what people are expecting. I think the team has a lot of leeway to get creative with the art, but I think going a WoW route with the character design might underserved the effort you have put in elsewhere.