Any action or inaction in a position of power will always grant you enemies
Problem with xp loss is that if you lost it during death, you'd just go kill centaurs or molerats for a while and then return. Death needs to hurt yes, but it shouldn't take players away from interaction with others. Because that's what levelling is: lonely grind. Besides, minmaxed pvp powerbuilds would have the easiest time since they can farm xp fastest.