These are not questions that anybody can answer for you. All we can give is preferences. That said, in general I find higher-level languages to be a better match for mud server development. My personal choice is C# at the moment, and I would most certainly choose it over Java.
Good design of what? The game? The codebase? If the design of the current codebase prevents you from doing what you think is best, then sure it's essential.
No, it doesn't matter. Muds are in that class of applications that don't need to care about performance 95% of the time. And when there is a performance problem, the answer is usually to cache something. A simple, straight-forward design makes determining that something rather easy.
I recommend against writing in C++ in this day and age. Other languages do so much more for you, and when it comes to application development this can increase your productivity significantly.
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