Well, the use of digitized actors was definitely a big plus for the first Mortal Kombat. I also think it played a big role on its success, but not entirely. Im guessing the violence, gameplay (back then), and the story play a bigger role.

Hmmm, I don’t think Midway will go back to the old days, but if they ever do, I hope they know what they are doing. It might look amazing to fight with “real” people....but it all depends on how they look.

I think you're exactly right. Many people, including myself, were drawn into the game because of the digitalized actors. I mean, back then having digitalized characters meant very good graphics (compare classic MKs with the Street Fighters). I think digitalized characters adds more realism to the game. I think a lot of the characters looked A LOT better when they
were digitalized. IMO

If I'm not mistaken, the reason why digitized actors aren't used for MK games anymore is because the movement stuff is easier to do without the use of them.

digitized characters they same way they used to be, but in 3D = literally impossible.

It's like asking a scientist to genetically engineer a two dimentional apple.

Let me also point out that in the 3D MK games, the developers also have more freedom with the characters' costumes and movements at the same time.

Two prime examples in the MK series are Kabal and Shao Kahn (I'm not sure if Raiden was originally intended to have a cape in the 2D games). On a few concept arts for Kabal, it had Kabal wearing a trenchcoat and some backpack, and on Shao Kahn's official MK3 artwork, it had him wearing a cape. Since during those days they were still digitizing, Kahn's cape and Kabal's trenchcoat and backpack had to go bye-bye, because those got in the way of characters' movements. Fastforward all the way to MKD, and we have the use of Motion Capture replacing digitizing, as well as Kabal in his originally-intended outfit, and Shao Kahn in his cape, with no interference of movement. Even M. Bison/Vega had no obstructed movement when fighting in his cape, and that was a 2D game (only because the Street Fighter graphics were hand-drawn instead of digitized).