Sinvaders
Sometimes gameplay limitations are good to orientate the player, full freedom is a wrong design pattern to me.
This is a statement everyone should internalise down to the core. The question about how to handle flagging for PvP isn't the only one that should fall under this premise.
Albeit being what's commonly referred to as a sandbox-MMO, the near complete lack of limitations and restrictions (in terms of gameplay drawbacks and choices that actually matter), was and still is what's heavily steering Ryzom towards a setting where everyone gets to achieve everything under any conditions without any reservations.
The current road leads to everything being unconditional available. There's no advantages in making a specific choice, there's no detriments.
Under the banner of so called player-freedom, the game drives itself with its game-design into an one-way dead-end that's with every passing day harder to correct back to a proper track.
But that's an underlying structural problem which can very hardly get changed without completely redoing quite a metric ton of features and/or so called improvements.