Well part of why I like Paper Mario is it's not like normal RPGs (I like those too, just in a different way).
Calling it "My First RPG" is kind of missing the point. It's not supposed to be a standard RPG. Nintendo doesn't make standard RPGs, it goes against their (Miyamoto's) entire philosophy (Fire Emblem doesn't count, its tactical elements allow it to fit the philolsophy). The philosophy puts gameplay, and immediate reaction and consequences to player action, first. Since they bought controlling interest in Monolith this may change a bit, but you won't see it in the first-party developers.
I think you may be letting your disappointment that it isn't a true follow-up to SMRPG get you into thinking it's horrible. It's a different kind of game, intentionally. It shows the difference between a Square game and a Nintendo game. I, for one, love the more lighthearted and playful, funny story, especially in TTYD and Super because Treehouse improved over time. They manage to be genuinely funny in a way that many games try to be but very few get right. The combat, unlike most RPGs, keeps you on your toes and remains engaging throughout the game.
I realize SMRPG has equippable items like a standard RPG. That really doesn't fit into the Mario universe for me unless it's done like Mario & Luigi where it's just new pants and the like. I was asking about the badge system in Paper Mario specifically, which allows for quite a bit of customization (not just special moves, there are some really cool, and really odd things you can do with badges) and a bit of a strategic element with the badge points in a very simple way.
You say SMRPG is more of an RPG than Paper Mario, which is probably true, but I don't necessarily count that as a negative for Paper Mario. You say SMRPG has fantastic graphics, and from what I've seen it does, but I also really like the style of the Paper Mario games. You seem to be judging it in a way that's not really the way it's intended. In the same way that Metroid Prime isn't really a first-person shooter and Smash Bros. isn't really a fighter, Paper Mario isn't really an RPG. Nintendo seems to not consider the genre as a constraint, but as a decent jumping-off point. The only Nintendo franchise that squarely fits into a genre is Mario, and that's only because the genre (platformer) was created and named after Super Mario Bros.
I will definitely check out SMRPG when it hits the VC (that is if I have the blocks, my Wii's internal memory is nearly full, maybe ~120 blocks), but I don't expect (or necessarily want) it to be like Paper Mario.
BTW, I'd like to hear your thoughts on the Mario & Luigi games, which are a bit more RPG like and have a few interesting new characters, and also Super Paper Mario, which drops nearly every RPG aspect.
Oh, and while this is kind of on topic, to be a little more on-topic, when is this week's VC Mondays coming? It was a pretty good week, I bought Kirby's Dream Course and am loving it and I would have bought Shining force if the AI was better and the battle system wasn't a total joke.