I've had little to no experience with the Undead and Ascended, but I have heard all kinds of viewpoints, and many seem to agree on one thing. The scripted events sucked. Apparently lots of people enjoyed just RPing about with the Undead and Ascended when there wasn't some kind of plot rail that had to happen, since as with all RP, things get de-railed. If you completely removed the scripting and just let the Ascended and Undead--That is, supposedly some of the best RPers in the server--do their own thing. If they can be trusted with extreme IC power, they should be trusted to create fun RP without a bunch of pre-scripted events. The same applies for if the staff adds another sort of conflict. Less scripting and more free RP.
Anyway, on to my personal opinion. I think you should add a new kind of evil and good, preferably one that isn't cliche. Make it so that they aren't extremely powerful, just very influential. I can see lots of potential from some factions currently in the game that could become huge 'evil' groups. Keep in mind that most evil people don't label themselves as evil...Unless they're completely loony. Iblees was self-admittedly evil, and even his followers would agree, I think. Maybe make a group that real players can support without just being off-the-handle pure evil.