I suggest PK system from others mmorpgs.
Neutral player - nick white , Hostile players - nick pink , Player Killer - nick red
Neutral player never drop any items upon death.
When Neutral player attack other Neutral player his nick goes Pink. For attacking Pink player you also goes as Pink and if Pink player is killed he do not lose items. For killing Pink nicked player you do not become Payer Killer (red nick). Pink nick becomes white after some time ( 1 minute exemple).
Player who succesfully kill Neutral player (player who do not fight back to have Pink nick) becomes Player Killer - red nick. Player Killer drop all items upon death and he lose level. After 1 death for 1 innocent kill he becomes Neutral again ( 2 kills of Neutral plyers is 2 levels).
Ps: Player Killer can become neutral again without losing level or items after certian of time (10 minuts exemple)
Benefits this system bring to FOnline:
- it will greatly reduce numbers of psychopatic killers that lurks on harsh wasteland
- it will encourage players militia in ungarded cities and mines
- players who have too much items will lose them as it was intended on Town Control event
Those are 3 big pros of this system.