You hit the nail with the guild v guild/capitalism comparison.
What you described in your scenario is exactly what you said, a perfect world situation.
However, this is what I think will be a likelier scenario. Let's say 60 percent of the pop roll evil and 40 percent roll good. As time goes by, the weaker portion of good population reroll an evil character so that the rest of the evil population won't be able to gank them. Over time, it turns 75% evil, 25% good. It creates a snowball effect and will dwindle the lower faction even more. Not to mention that two strong guilds in the same faction won't be able to pvp each other for bosses, so they'll resort to training and other low-ball tactics.
Under a faction v faction server, it doesn't promote Pvp, it promotes nut hugging the stronger faction. A stronger guild in a faction pvp server is offering protection for the entire faction not just the guild. If an evil guild is trying naggy, other non-guilded evils can pve in solb without fear. And in return, if a good guild tries to contest naggy, the non-guilded evils will hold hands with the evil guild to get naggy down.
In a guild v guild server, the stronger guild is only offering protection for those in the guild. If a guild is trying naggy, you can bet your sweet ass they'll pvp until no one else is in zone. And they'll be constantly be looking over their backs.
And who cares about the server being "story oriented"? We are not asking for a lore-focused server. We are asking for a PVP server, not a FV server.
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