Now i know that there are countless threads on improving the graphics, and i know that a complete overhaul would require a complete rewrite of the game.
So, what i suggest is only improving character textures, which is quite possible to do judging from the hd environmental textures. A bit higher resolution textures and adding some normal and specular maps to a character would improve them immensely, especially the armor and clothing, dragonborn's scales, warforged's metal sheen etc.. Of course, i understand that drawing so many textures would take a while but it seems quite feasable and would improve how characters look quite a bit. Unless, the engine is limited in adding normals and speculars to characters and armor, in which case feel free to ignore my suggestion.