Well my idea is to have two differenct kind of zones for PvP. Lets call these zones: Duel and Open.
Duel: Much as the system is now. It 'safe' zones, such as the main city and near by areas. The duel opton remains in place. With a slight twist, as the guards of Hydlaa don't want fighting on the streets. Anyone caught duelling outside the Areana, will be put in jail. This could be something along the lines of the death realm. Where the player has to find his way out of the prison. Or simply could pay his 'bail' money or 'bribe' a guar.
Open: The big wide world (it dangerous), open PvP is possible. Kill, hack and slash.
To make PvP more real, i think 'death' has to be more real in game. At the moment 'death' is just another place to visit. Someone else has posted something on this. But if you die, something should happen to your stuff. So every time you die within 24 (real hours). 1st: lose 10% Tria(which gets dropped on ground where you died). 2nd: lose all Tria. 3rd: lose all PP, 4th lose equipment & 5th lose character.
For this i think there should be somekind of bank/storage area. So players can store excess tria or equipment.