This sounds interesting. It's a lot like WoW PvP, except that they've taken concrete steps to eliminate ganking with the level limits and honor system; and since we have no corpses, there's no corpse camping.
I like they way they've incorporated taunts and hate reduction, which otherwise would only work on software constructs.
I always thought a raid on the opposing city would be a lot of fun, with all their NPC's joining in the fight against you. I wonder if city guards will still give you the instant boot outside, and if not whether they'll raise the levels of city guards.