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I believe you're confusing "fantasy" with "lack of internal consistancy". By your line of reasoning I could roleplay anything I wished - a smurf, a marshmellow man, a teletubbie, or whatever - on the basis of it being "fantasy".
It is believable to see things like magic and dragons within most fantasy muds, because they are consistant with the reality described by that setting. In the other hand it is not believable to see things like rats carrying boots and bows within most fantasy muds, because they are not consistant with the reality described by that setting.
The more internally consistant a mud is, the more immersive it is - and the more immersive it is, the better suited it is to a roleplaying environment. That is why you won't see serious roleplaying muds with a smurf village in them (unless the mud is based on the smurfs theme).
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