Yeah, budgetray constraints may have forced them in that direction. But I suspect part of what the Borg so popular was the viseral (sp?), brute force integration between flesh and machine. Tubes and other hardware literally punched through flesh. There's something about that which makes a lot of people squirm. I'm sure most people here have heard or read the debates that "Q Who" was meant as a partial homage to Doctor Who and the Borg were supposedly meant as an homage to the Cybermen. But visually, I feel confident Trek took inspiration from "HellRaiser" with its black leather clad CenoBytes and their tortured and flayed flesh.
Yes, Timo, your idea of Ruk-ish looking, more integrated cyborgs seems like something TOS could have more readily achieved and would have been more "timelessly" futuristic, but I wonder if they would have maintained fan favorites like the Frankensteined robo-zombies we actually got.