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I think more fair PVP (4 level range) with greater risks and rewards (single item loot) makes for a more exciting and competitive pvp environment.
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It'll probably do the exact opposite. A 4 level range rules out a huge chunk of potential PvP targets, and itemloot just reduces activity, population and PvP frequency all around. I don't see how you could ever think those two things would make for a more exciting PvP environment when it has been proven a million times that it does the opposite.