yeh, would it be possible to make an mmorpg/ iso pixel game with AGS?
In theory, sure. AGS does not have any network support on its own, but this could be added using a plugin like this one (http://12.22.230.41/MicroTech/Hosted/Game/AGS_TCP-IP_Plugin.zip).
In practice, however, I highly doubt it. AGS is simply not optimized for any sort of multiplayer, let alone Massively Multiplayer. There would be a great deal of scripting/programming to do just to keep everything in sync, and there would probably still be a lot of slowdown and lag.
(Bear in mind, these statements are made by someone with very little experience in programming or AGS. It might actually be trivially easy to make a MMORG. But I doubt it.)
HoN