I was initially considering doing away with the 2 competing factions idea. Right now, it's mostly for PvP purposes, and rarely it's used for PvE and EvE purposes, so I was thinking of scrapping it.
But before I ruled it out, I came up with another thought of the day:
Factions that matter:
What if the factions are actually tied to the plot? You can play as whatever you like. Now this goes along with my previous thought, that the world will END someday. That the MMO itself will only last 6 years or so, and then finish forever. And by the end there will be the final battle, which is between the factions!
Let's say 3 factions, all competing in the final battle for supremacy. And because it's the end, one will win! Thus altering the whole plot of the game at the end.
Once again, far from perfect, but just my thought of the day.
Let the imbalance issues pour forth!