With the traits issue, I try to remember how TS3 handles them (it hasn't been that long that I've played, I just never really paid attention to these things), but if I remember correctly, they influenced a sims' autonomy much more than in TS4. Bookworms would be drawn to reading books when left to their own devices, while geniuses would often resort to playing chess. TS3 however also had some useless traits like daredevil. What exactly did this trait do except renaming certain interactions? My suggestion for a trait overhaul is to just make them influence sims' decisions more. As it is now, sims seem to be drawn to electronic devices when you're not controlling them, doesn't matter what traits they have. Traits should also influence sims' skills a bit more. As it currently stands, romantic sims only get the occasional flirty buff or a tense buff in case they haven't done romantic interactions in a long time. Why not give them a slightly increased success rate for flirting? Or active sims, instead of just giving them energized buffs, why can't they be naturally better at the fitness skill? Non-commital sims could have a slightly higher chance of autonomously flirting with sims other than their partner. As it is now, emotions and whims seem to be the only things really influenced by traits, and there's definitely room for improvement. I downloaded a bunch of custom traits from modthesims and they're so much more influential than the actual traits in the game. Those traits do exactly what I suggested. There's a "sporty" trait, and a "talented" trait, for example, with the former making sims much better at fitness skills, while the latter just lets sims build any skill so much faster. This trait bundle also includes traits that influence sims' lives negatively, like the "naturally thick" trait, which makes them gain weight much faster, or the "untalented" trait, which makes them, you guessed it, gaining skills much slower. That's how traits should be, not just giving random emotional buffs that go away after a few hours, they have to influence sims' lives at any second, their relationships, their skills, just everything.
As for your second point, the issue with happy buffs overriding any negative emotions could easily be fixed. I just witnessed this recently in my game. Things like death moodlets don't give a strong enough sad buff to really make a difference. I don't know the exact number, but I think it's something like +3, maybe +5? Compare that to the asleep-moodlet, which gives a buff of +10,000 to make sure the sim stays in the "asleep" emotion until they wake up again. Now if they would just increase the value of sad buffs for witnessing a death, for example to +30 or something, sims would actually stay sad even while walking into a well decorated room. It would take a ridiculously high amount of buffs to get them into an emotion other than sad at this point. The fix would actually be so easy, so why isn't this a thing yet? They should also tone down originally happy buffs increasing other emotions like playful or flirty. It's just unbalanced. I am also currently using a mod that removes the well decorated buff from the game completely, and it makes such a big difference.
I also agree with the lack of consequences. The issue with parents not caring about their children's grades can be fixed in case you have Parenthood, since parents have the option to either scold the child for bad grades or talk to them about it. It doesn't affect their mood however, which is a bit weird. Depending on their personality, they could be sad or angry because of their child's bad grades. I also think it's too easy to reconcile a relationship after one partner cheated. In TS3, I have a sim who has the non-commital trait and flirted and even kissed another sim right in front of his current partner. I eventually managed to get them back to a good relationship, but it was really hard because they were constantly rejecting each other's advances and it was just really hard for them to reconcile after he cheated on her- in TS4, it seems like you just need to apologize, ask about day a few times and everything is well again. I also don't understand why they haven't added burglars into the game yet. They would just need to take the system for vampire break-ins, replace the vampire with a burglar, and instead of him drinking from another sim make him steal a random object from the home - they wouldn't even need to make an animation for that since it already came with the kleptomaniac trait. Or am I missing something? I am kinda surprised that no modder has done it yet.
I can't really agree on the whims though. Often enough, they are based on traits, there just not a high enough variety of them and they're pretty unexciting, which is my only complaint about them. My evil sim rolls whims like "become angry", while my child-hating sim has whims like being mean to a child. Sims with other traits usually don't roll those whims. Aspirations also play a part in what whims a sim will have, like my evil sim rolling whims to be mean to a specific sim because he has the public enemy aspiration.
I agree on the fifth point. I'd love favorites to make a return, as well as everything else you've listed.