/looks at the topic name/There is no PK's in free pvp sandbox games. So there can be no penalty for something which doesn't exist.
Permadeath is interesting. But unfortunately not really viable, and the same goes for all attempts at in-game penalites or debuffs for the attacking PKer.
Permadeath - it is too severe. Because in pvp game you die alot and heavy penalty will interrupt ingame life (ever-lasting battle, coz this is pvp game, better to say) severely. For example there is full loot in EVE, but ships and modules are mostly cheap, and you may die 5-10 times a day
This game is casual and carebear like any other casual mmo. Free PvP game starts from big open world without any carebear hideouts.
The MMO would need to be level based, and have leveling zones all the way to max level that had no PVP in them.
Any character can play to max lvl in complete safety.
However, progressing at end game would require characters to enter the "wild lands", a lawless territory where they can be attacked by anyone at any time, but the only land where they can progress their character and build towns and cities by pooling their resources.