I read most of the thread, but I''m not going to finish it as it''s 8:30 am and I have to leave for class in 15 minutes. Anyway...

Have you thought about removing most if not all statistical advancement? I know it seems odd, but take Counter-Strike or other non-persistant FPSs for instance. The player becomes better at the game because it''s a twitch game and requires some skill to play, as opposed to a game that requires no hand-eye coordination or skill above basic strategy but it solely dependent on what stats your character has. If you make killing or interacting with other people fun, people will continue to play.

In Counter-Strike, everyone has relatively the same chance of killing someone else. The equipment available to a player is the same for everyone (on each side anyway, but the sides are balanced) but to get better equipment, you have to be successful and make money. However, even if you do earn better equipment, you can still get taken down by a newbie with a pistol if you don''t watch yourself.

As far as character advancement, it could go in the form of rank, fame (or infamy), etc. Stuff that doesn''t matter statistically, but gives players a sense of achievement. Equipment should be capped and kept realistic (as no matter how good a player is, they won''t be able to survive a "Mighty Sword of Nuclear Fallout +3", and perhaps money gained after getting all the best items could be put to maintaining those items (put in some sort of item quality system) or buying a house, filling it with furniture, customizing your character''s appearance, etc.

But yeah, I''d definitely suggest you look at the FPS genre for inspiration. In fact, your game should probably be a persistent FPS with an optional third-person mode.

Back to the policing idea. I was thinking about this same thing a bit ago and it would seem to be advantageous to have a secret group of players who can enter an "enforcer class". The players that achieve a very high level either get invited or fight their way to a special temple where they are asked to become an enforcer (or something like that).

The role of the enforcers is to take care of the newbies and they take an oath to that effect. The enforcers have magical armor that is invisible, so they can appear to simply be another newbie, but they can easily dispatch the powerful player who is killing the low level players. How cool would it be to see a high level player killing peasants and then come across a "peasant" who he keeps hitting but doesn''t die, then in an awesome show of power the disguised enforcer rips him a new one, leaving him weak and almost dead (and forced to flee). Would this work?

I like it, it reminds me of the "spy" in Stratego. You don''t go rampaging around killing everything that moves with your #1 guy, because you know that "S" is in there someplace.

However, I think I can safely assume that there will be rather few enforcers in the game, and so I propose that they be given some additional authority beyond just whipping the crap out of bullies. Let them censure griefers in some other, more poignant way, like demoting them a level or three, or letting the newbs he whupped on each take one piece of gear of their choice from him.

I''m going to have to agree with Anonymous here. There are games that focus on balanced pvp. The thing is, they''re not mmorpgs, they''re multiplayer shooters.
Honestly, if the focus of the game is on pvp, then I doubt it''ll be high in roleplaying. Try making it an MMOFPS with a persistant world instead of a MMORPG.

Is it possible to retain character development without letting characters gain an advantage over each other?

Not if by character developement you mean improving skills. That would mean you''re asking "can characters get petter at something with getting better than other people?" If there''s no signs of improvement, how do we know the skill has changed at all?

That being said, I may have some ideas to bring in a little something. First off, forget levels. If power levels are the same, then levels loose their meaning. Try shifting the focus from character skills to player skills. That way how good the person is at the game is more important than their stats.

Here''s a quicky idea. Let players pick up enchantments that augment and expand their abilities. Perhaps they could have variable strength. Give them a basic enchantment like a healing factor and let them them pick one other. New enchantments could be gained during play. Perhaps when a player dies the victor can get a copy of one of their enchantments.
But wait, doesn''t this mean older characters will still be more powerful, as they will have massive numbers of enchantments on high power? Not neccesarily, you just have to limit the total power of the characters active enchantments. I can see two main ways of doing this.

1. Tie it the characters Life Force. Their vitality fuels their enchantment and can only hold so many enchantments. Heck, maybe enchantments consume vitality. So characters with more active power suffers in other ways.
   
2. Have enchantments feed of local mana levels. This mean a given area has to limit to how much power it can support. Those with fewer enchantments are better in low power areas, as they don''t have enough to break the limit anyway. High power characters going into lower areas will find their power diminishing accordingly as they run low on mana. However, these powers will come right back when they return to high mana areas. This would help naturally create newbie and elite areas, ass people would seek places where the mana level match their maximum enchantment total.
   

The nice thing about this point balance system is it provides choices. You may not have enough to max out all your enchantments, but you could probably max a few and throw in a few more at lower levels, thus allowing you to customie your character.
Maybe only pcs have enchantments, thus making them special and different from npcs.
Another idea: Let the characters have a healing factor enchantment that lets them eventually recover from anything. Let them get negative hit points and heal back up to positive. That way you could "kill" a pc, but unless you did massive damage, they''d eventually recover. This wouldn''t be true to life, but it would be justified by their healing enchantment.
Perhaps you could throw in a trade-off option. You can copy an echantment from a corpse, but doing so drains your stamina and restores the corpse to life.
For even more longevity, let them enter, "ghost mode" if they loose their corpse. Perhaps there''s an enchantment that let''s them reform a body. If the ghost started at below maximum energy, they might have to wait a while before reforming. Maybe the body starts as a corpse and has to recover from there normally.

Anyway, I better cut out now before the next wave of ideas hits. Good Luck.

Hmm... Looks like things are winding down. Ah well, maybe I can get a few words in anyway. I talked over this thread with my brother, and we worked out a refinement of the enchantment system I mentioned earlier.

Have "glyphs" as kind of personal enchantment. Each character''s glyphs are listed by priority. Players can move things around on their lists, thus changing each ones priority.
Glyphs are fuel by ambient mana. Basically the system starts with the area''s mana level uses it pay the activation cost for each of the character''s glyphs, in order of decreasing priority. This means the power at the top of the list is bought first. As characters go into higher mana areas the extra power may allow more glyphs to be activated. Similiarly, going into low power areas can cause glyphs to deactivate, with the lower priority ones going first. Duplicates of the same glyph can stack. For example, 2 flame bolt glyphs would result in a level 2 flame bolt.
Active glyphs appear as glowing tatoos on the character''s body (hence the term "glyphs"). The location of the gylph depends on it''s priority. Duplicate glyphs do not leave multiple marks. However, they do increase the intensity of a preexisting tatoo. Clothing can be used to cover these, though the more clothing covers the more material used and thus the more it costs.
Glyphs can be copied from other players, though doing so takes time and energy. This makes it useful mainly on allies and fallen enemies. Copying doesn''t allow the character to gain more instances of a glyph than the target has. Some merchants also sell glyphs and items may exist which may either grant glyphs or allow them to be copied.
Some glyphs can be combined to make new glyphs. For example, combining burning and bolt glyphs may result in a flame bolt glyph.
The life glyph is a special enchantment only available to pcs. Having even 1 life glyph makes the character an "immortal". When the character''s life drops to 0 or less, they become a corpse. If the corpse is destroyed, they become a ghost. The life glyph grants the following gifts:

1. Extended Healing. By default, ghosts and the living heal slowly, while corpses decay. This healing bonus speeds the healing rate for ghosts and living, while allowing corpses to slowly regenerate.
   
2. Resurrect. This ability allows a character at full health to change into the next state up at minimal health. Thus a ghost can become a corpse, which can later become living.
   

Each character should either start with a life glyph, or be able to gain one on an early quest. Only admins should be able to forcibly remove a character''s glyphs.

Btw, how were you planning on handling the economy? In many mmorpgs, monsters represent the primary source of income. Is it going to rely more on gathering and crafting by the players?