Pretty sure Daggerfall was about the size of the UK. There was a lot of riding, but it was actually kind of fun knowing you've been riding for 15 minutes in order to see something like 0.00000000001% of the game world (which in this case was the dungeon at the end of the ride, riding always looked the same).
By my calculations, walking from Lisbon to Moscow in real time should take about 3 weeks, but if you think about it, if every settlement in the immediate vicinity of Lisbon were represented, it would probably take longer to march to all of those in succession.
It would be cool, but it's probably not the team's aim. I can't imagine it'd be terribly hard to mod, unless you wanted the content to be accurate to each location. Increasing that accuracy would obviously make it exponentially harder.