Well, when it comes to my favorite game ever, its a little harder for me to explain. Some people have two favorite games over all the others, I have six of them, between them, no one is better than the other to me, because I cant compare them and I just cant pick one, its like asking a father which of his kids is his favorite, it doesn't work well. Those six games are the last console Zelda from ALTTP to SS and taking out FSA, a game that is still high between my favorites, not begin the top doesn't mean it doesn't get my love.
Now moving on topic, OoT is one of those games, its a "great" game because I am lacking the words to truly describe it, perfect? no, I don't think there can be a perfect game since there are just too many kind of games to put everything in a single one who can rule them all. But while OoT could have never be perfect it doesn't mean it could not have been better.
If I had to look at someone to point out what could make OoT better, is its close "brother" MM. While there are many other things that OoT could learn from many games, MM is the better choice because of its close similarities in the gameplay and overall design. MM could learn from OoT, but what matters to us at this moment is what OoT could learn from MM, and that's the characteristics that make MM special, or some of them. MM created a world that felt alive, even if it was for only 3 days, there was a lot to do with every person you met, they had many things to say, they would talk about what its happening in the world, and they would interact with it and the other people.
Now we have better technology to do things that would have been (almost) impossible to do at the time OoT was released, and no, I am not talking about graphics, actually if I were to make OoT better, my last priority would be the graphics, (though the better graphics could make it better... or worst, who knows) what I am talking about are gameplay elements, for example, new ways to interact with the objects in the world or motion controls.
I am not going to mention things like making the story longer and/or adding 50 dungeons, we are talking about making OoT better, not just making any other game better than it, if we changed that kind of things, it would not be OoT anymore.
In resume, OoT could have been better if it had a world like MM had, with things to do everywhere and a world that feels alive, plus, adding gameplay elements thanks to better technology we have today.
Anyway, I think I would leave OoT as it is, I would miss it, if I were to change it I would better make a new game.