How gamers killed Ultima Online's virtual ecology

They killed it by excessive PvP. I played it from the start and while PvP was fun, it got to the point where you had groups preying on everyone else and saying it was "Fun". When you had a newbie character and you were getting killed every time you left the town just so someone could steal your starting cash, it got to be too much. That's why they split it into PVE and PvP.
You also had people abusing macroing so they could get GM skills extremely fast.