Personally I like "small group PVE" for my fun, but regardless, I can see what you're saying. It's not one we're personally going to agree on, as our interests are too different.
I think the main problem is that there's 2 (or more) groups of people trying to play 2 (or more) completely different games, using the same game engine and occupying the same universe. It's a balancing nightmare.
There's those who see "getting, building and making the stuff, levelling up etc" as the "actual game" (like playing Fallout 1 or 2, but with lots of quests / characters missing and currently no "endgame").
Then there's those who see "getting, building and making the stuff, levelling up etc" as a really annoying distraction, before they can play the "actual game" i.e. a fallout based isometric shoot-em-up vs other players, with all top equipment (like playing a team deathmatch in Doom, Quake, Return to Castle Wolfenstein or newer games of the same type).
Obviously there's crossovers, there's people who do both and there's other groups such as roleplayers etc, but if we're to simplify things a lot, there's essentially these two very separate "games" within the game, which both have different needs.
Regarding factions mod etc, as far as I'm aware, yes - the first change from the original "Fonline" (other than the language) was to add factions in, and it was called "Factions mod" - so it's true that 2238 is based on a "Factions mod", but whether it's still meant to be that, I'm not so sure. There's been a lot of changes, improvements and development to the game that is not purely PVP related. If you have a run around on an unaltered SDK version, it very quickly becomes apparent how much they've improved and developed throughout ALL of the game.
Ultimately, the devs may decide to focus on one part or another, or they may hunt for the elusive balance where everyone is happy, or perhaps even split into two separate games.
I'm completely in agreement that for what you want from the game, you're right about this suggestion i.e. "in a game where you die and lose your gear and everything in your inventory we should be able to make 3 combat armors an hour". However this spoils the other "game in the game" if that makes sense?
On the other hand :
[...]everything would be impossible to obtain and we would all just be fighting each other blue suit unarmed for a 10mm pistol.
Wasteland is actually harsh? Sounds awesome to me
- BUT this would probably spoil your game just as much.