In my opinion, I think the graphics are just fine. One of the reasons, and I would bet some other people as well, choose OSRS over RS3 is the nostalgia of gameplay from that time back when graphics actually looked like that. The simplicity of the look and feel of the game makes it so anyone can pick it up and play, but there are still deeper mechanics in such a simply looking game. RS3 went the direction of an MMO feel with the graphical updates and playstyle, while OSRS keeps that simple, blocky, point-and-click MMORPG.. I myself do not enjoy RS3 because of the way the interfaces and graphics look and feel.
I do wish there were more games like RS out there. Multiple skills and minigames. Hundreds of quests and activities to do. It really is a one of a kind game.