Very cool... I had an idea a good while back related to faction gain while risking PVP due to the area of the mobs. I think maybe putting a certain item on those mobs for a turn in that gives faction might just be the way to go. For instance: Player is fighting a Mob, and a PVP'r jumps him, any of the faction items the players are carrying would be lootable from the PVP'd corpse.
Why didn't I think about that way back when.... hahah
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