Hard coded, no question.
Having soft-coded teams introduces nothing but problems. Immortal healing is the big one. Cross-teaming also discourages PvP and encourages the creation of a cross-teamed uber guild, which will be unstoppable thanks to having immortal healers from each faction. You will basically be forced to cross-team to compete at the high end, which defeats the entire purpose of having a teams server.
Hard coded teams means that you know your allies and your enemies with no ambiguity. You know who your friends are, and you stick together out of necessity if nothing else, because you won't be getting help from the rest of the server. This dynamic creates much stronger teams and feelings of community.
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