PvP factions for the win. Each guild's highest ranking officers will choose whether or not join a faction. A purely PvE guild can opt to stay out. This will be good for the poorly geared players just starting out in PvP because they can reap the benefits of playing beside guildies/factioners with better gear. Rewards for both low and high level gear would be given for winning certain open-world PvP contests.
On top of that, it will be a perfect setup for a merge because it will bring open-world PvP back to the game for those guilds who decide to "opt in" to the factions system by joining a faction. The PvE purist guilds can stay out of it and don't have to worry about being ganked while leveling up or chasing their baddie PvE gear that they'll never use to kill another player's toon with.
This will even encourage players to join more highly skilled, PvP-oriented guilds again and start doing some world PvP as they attempt to fight each other over certain open-world goals for tokens and exp. It'll be a great system (and perhaps the only system) for gaining level 11-15 PvP gear when it's implemented--urging guilds to grab their balls and do some real team play once again and take real risks (in guild pride) in PvP.
I think it'd be good to put caps on how many folks can be on a side in one zone at one time, though, to prevent guilds from stacking up in one faction or to prevent the largest guilds from always winning with numbers. It'll be a more skill-based system that way--maybe something like one major PvP contest per zone with 12 per side. Funcom could make use of existing zones and terrain in interesting and efficient ways. It could get very interesting with a 3-way faction system, and it'd entice a lot of PvP'rs back to the game, and keep the new ones around for a long time.
To start with, maybe Funcom could add just a handful of these open-world faction contests and see how does. If it takes off and the player base grows, then they can add more events, in more zones, at a later time. FC could have a lot of fun creating different contests for the "factioners" as they expand to more zones with the factions system.
To make things more efficient, perhaps Funcom could incorporate some of the existing PvP week's games for the faction events, for starters. This system would be a 24/7 thing that kicks off in just a few zones at the start until more PvP'rs are attracted to join and stay around in AoC... no one week per months BS.