This idea is implemented in KOTOR, the alignment system. It is basic good, bad, and neutral. The system could be a graphed coordinate system to represent varying levels of Chaos, Law, Good, Evil, and Neutrality. Along with this system could be a PK system based on opposite alignments(your choices will always have consequences). Only graph spots near the exact alinment\'s opposite can attack freely(limiting number of people killing others so that one player doesnt get overdrawn.
CO(Conquer Online) has a system where the name changes color based on how many the avatar has killed. Red means a few, black means a lot. If your name is black, you can drop equipped items when you die.
Kythag