My favorite world (and the only one I've run in the past 10 years or so) has always been Mystara. This is largely in part to the first Gazetteer I ever bought, the Principalities of Glantri. Glantri is a magocracy, full of wizards, and I've run about three different long campaigns set there.
I never had a group that was 100% wizard, but usually everyone but one or two people had at least a some wizard levels. During 2nd ed, of course, the elven wizard/X were quite popular. The 3e party I GM'ed for consisted of:
elven illusionist/rogue/arcane trickster
human abjurer/loremaster
human fire elementalist (home brew)
half-elven fighter/wizard/arcane archer
human cleric
There were also a human monk and a human paladin earlier in the game who later dropped. So, by the end, all characters had spellcasting abilities, and 80% of them were wizards. The fighter/wizard started off focusing on the fighter side of things, but finally started putting everything into wizard because it was the only way to get any IC respect in the setting.
It definately makes for an interesting game. The DM needs to know the various spells pretty well; it takes time to constantly look things up every few minutes. Straight hack-n-slash slugfests were rarely used; combat instead became a lot more tactical, taking into account positioning and ranges and creative ideas from the PCs. At higher levels the cleric was able to handle pretty much all of the healing; at lower levels, they party used a lot of potions.
I'd like to run another Glantri game eventually. Seems like I just run the same campaign each time I find a new group, but I like seeing how things differ from one set to the next. That, and since I tend to run high magic games anyhow, I'm pretty sure any groups I have in the future will also be wizard-heavy.
The only M:tG type feeling we had in the game was from the abjurer, who had all the counterspelling feats and used counterspells frequently. It made sense for the character and the setting, as well as tactically (if you've got the mages to spare, having one commit himself to keeping the enemy occupied is a damn good move). So it never bothered me too much. I mixed up my villains so that they weren't all spellcasters, and threw in big monsters that didn't use too much in the way of magic, so it's not like he was counterspelling every round.
We did get the occasional wizard's duel, which was sort of cool. Occasionally a PC would get burned, but more often it was NPCs underestimating their capabilites. For instance, right after Defenders of the Faith came out, I had an evil priest all set up to use his Inflict spells at a distance, using the Reach Spell feat. But the first time he tried it was on a PC with Spell Turning up, so the bad guy ended up zapping himself with an Inflict Critical. He was less than pleased.
At the end of the campaign, I was setting up an arranged duel between the abjurer and his superior in the Craft of Dracology (that was one of the "specialities" from Gazetteer) that had the potential to get pretty nasty. It never happened, though; I ended the campaign largely because I didn't feel like dealing with epic levels, and I think the other players were starting to get a little tired of the power creep as well.