Does it work to add pop culture and outside-the-game references in a video game? I think so, but it depends on how it is done.
Take Tabula Rasa for instance. This futuristic, sci-fi MMO interjected a fair bit of product placement in the form of Dell computers at all the terminals. Seriously? Our planet was wiped out by space critters and machines but Dell remained as our tech source? This ruined a little of the game for me; this small non-lore reference didn't really need to be done.
WoW is steeped in pop culture, and in many cases its fantastic. I totally got giddy when I saw the hatch reference from Lost in Shalozar Basin (crap, does this explain why we couldn't visit Northrend 'till now?) or Linken's quest line in U-Crater (that boomerang stayed in my bags for as long as I could).
DO NOT PUSH THIS BUTTON!
Things get a little weird when you see them in boss fights, though I think what makes the Mimiron fight so much fun is his emotes:
"Gaze upon its magnificence! Bask in its glorious, um, glory! I present you... V-07-TR-0N!"
Not only does that fight toss in some fun and levity, but also a Voltron reference, which my 6 year old self can't resist. Of course, I tend to stop listening to them as my grid lights up with Napalm and Plasma Blast icons. At least I know when someone has died early!
Spending a lot of time working out strats and wiping on bosses gets old, so for me, some interjection of fun into a raid helps lessen the pain a bit. Sometimes, these references are an icebreaker on a raid. More than once, we have had raiders say "I do not think it means what you think it means." or, "Kill the one in the dress!" which gets folks laughing and breaks the tension.
In fact, the game is full of what is referred to as Easter Eggs (click to see 12 pages of 'em) which the designers have added numerous references to everything from classic literature to movie characters and the list keeps growing. I like the subtle references (read: anything in Undercity) and sometimes the not so subtle ones (Chasing A-Me)
Am I in the game or not?
Unlike some other games, WoW never really went out of it's way to be immersive. The sense of wonder and awe kind of get lost when you are fighting mobs that hold a cartoonish quality.
WoW has strayed a bit from the original idea- putting yourself inside a real-time strategy game- to taking a little bit of our RL world inside our game world. It flows back and forth, as well.
The books Arthas: Rise of the Lich King and Day of the Dragon are rather popular. I poured over the compilation book which featured the story of how Kara was formed. It was kind of cool reading the back story based on the place I spent my nights online. Then again, I also enjoyed the Myst books as well. This flow between the game world and the so-called real world intensifies and enriches my game.
I will argue that while the fun and humor in the game is a nice change of pace from the Hack n Slash, some of it does go a bit overboard. He Feeds on Your Tears and I Love the Smell of Saronite in the Morning names are just silly. I do worry about the time and energy spent into coming up with achievement names.
Blizzard intends to keep the light-hearted humor coming, and I hope it doesn't degrade to cheese too much.