Not only would it discourage mutually agreed apon pvp (like for duals, ect. Unless the people involved implicitly trusted one another) it would prob also encourage pvp predation. People going around, pvp'ing lower lvls just to take their gear and use it as they see fit. Highly doubt that would encourage the playerbase to grow

Normal gold / xp loss is prob the safest bet. The ghost world idea could be fun, provided it was well thought out and implimented, and prob only reserved for people who are past lvl 16 (and thus should have a pretty good idea of what they are doing by that point, so punishing them with time spent in the neither-world would be justified, as opposed to throwing in a 1st or 2nd lvl player who's only been on the server for a cple hours)