First thing first:
Here's a list of engines on TFGamesSite that have been used to make TF games. (Not all of them count as open-world, but at least some do)
These are the Interactive Fiction engines I've interacted with lately:
RAGS
ADRIFT (but it relies on text entry)
Twine
Quest
QSP
Inform
There's a bunch of "also-rans" where I've seen people squish open-world games into existing engines:
Ren'Py
RPGMaker XP / VX (the Grrl Power prototypes)
RAGS achieved critical mass a while back with the people at tfgamessite, so there are a bunch of games there. Unfortunately, its multimedia support is extremely dependent on the specific version of Windows Media Player on the system, so a large number of games will only ever run as intended on WinXP. It's also a bit of a memory hog and sometimes prone to crashing.
Everyone seems to be using Twine right now. It's a reasonable engine, but it's really designed assuming more of a traditional create-your-own-adventure path where the total game play is more like a book. Persisting state across pages works, but there seems to be a lack of the kinds of tools that help keep things working. (E.g. typoes or stale variables will just fail silently)
It's worth noting that both Lilith's Throne and Newlife are written using completely original engines in Java. If you write your own engine, that's a lot of work. If you
don't, you're probably going to end up fighting what the preexisting engine lets you do.