Item loot is a horrible idea on any serious emu. Don't get me wrong, I think it's really fun, but when you impose harsh penalties for dying in pvp, then any time someone dies to a bug, a gank, or any situation they think is 'unfair', they get frustrated and are much more likely to ragequit. I'm all for having permadeath, item loot, and all sorts of crazy hardcore shit on a pvp server, but I know I'm in the minority and most casual players don't find that appealing.
Just one example: sometimes there's a bug where another player doesn't appear in the same zone (ie, you never see them in zone, can't target them, they don't appear on /who, etc). When I used to play, I personally had gotten free kills on a few people who just never saw me in zone, and they had no idea why their health was getting lower and lower for seemingly no reason. These kills weren't a big deal because all the other players lost were a bit of exp and whatever plat they were carrying on them. If the server had item loot though, then they could possibly lose their t-crown, trak BP, or whatever other insanely valuable droppable item they were wearing. What's a player going to do in that situation? Petition the GM's for their item back?
I'm not saying item loot can never work, but this server needs a lot more bugs fixed before it can ever be considered - and even then, most players find it a little too harsh of a death penalty and would be discouraged from playing.
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Project 1999 (PvE):
Giegue Nessithurtsithurts, 60 Bard <Divinity>
Starman Deluxe, 24 Enchanter
Lardna Minch, 18 Warrior
Project 1999 (PvP):
[50 (sometimes 49) Bard] Wolfram Alpha (Half Elf) ZONE: oasis
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