LR, I think you guys are on the right track. The one thing to avoid is to make pvp purely consensual, so that a character can strut around everywhere and accept challenges only from those he is sure he can beat, probably name himself "Grand Lord", but never allow himself to get in a fight with a same level character. A version of this is the pkers who only look for lowest levels to fights. UO was full of these types.
I have seen many people talk about pvp zones, which make sense. If you don't want to go pvp, stay out. Now, I realize that there a players who can't stand the fact that this zone even exists, because their unwillingness to enter it says volumes about themselves, so they want to take it away from everyone else. If CoV caters to these guys, I'm out and I can assure you this game will become famous as the game for six year olds and wooses.
On the other hand, something has to be done to prevent lvl 50s preying on lvl 5s. The answer clearly isn't scaling, which almost eliminates the entire idea of character progression. I'll just send my low lvl 5 scrapper who just got impale out to kill some lvl 50 controller. That's fair. Right? Or maybe two level 5s should be able to take out a lvl 50. This too is stupid, and no other game does it, for good reasons.
I will be interested in seeing how you deal with preventing higher lvls from spending all day hunting down auto-kills. I hope you don't do it by capping the lvls who can enter a zone; if I send my lvl 37 scrapper into PP, maybe he shouldn't be able to prey on the lvl 8s there, but to prevent him from entering at all takes away a lot of the game. And making him red so the guards attack, if he pks some noob, just sends the outlaws to areas away from the guards, so you have two choices with a new character: safe zones, and zones where you will be pkd without a chance (UO).
It certainly is true that some lvl 50s can't pvp to save their life, and this game offers some ability for skill to show. I would tweak it some more, so that certain types of builds have better chances against others (more so than now). I think the idea of Origins is not put to use in this game. Maybe some attack or defense bonus or weakness against other origins (e.g., mutants have an advantage against natural, weakness against tech). Also, I would add more power options, so that you don't only have a choice between one primary and yet another pool, but instead can choose between four or five primaries, and if you choose one, you won't get all four down the road (even when you hit the cap).
The game engine is good and the approach to minimizing computer resources by getting rid of objects on ground etc is a good idea. The game runs well, with great graphics. Just make sure that City of Villains actually has some villany in it, and I don't mean being able to sleepwalk through a "dangerous" area, knowing that nothing can happen to you without your consent. That is not pvp. It's not a city of villains. It's woostown.