Normally what people think about when someone declares 'loot and PvPers' they think of that one person who is allowed to go sociopathic, minimize risk, maximize DPS(with character not designed to grow in anyway, while having almost no repercussions due to character design). This is what turns people off from open PvPer games, and what you are fighting against as a designer if such a game is not your goal.

I am a bit confused by this paragraph.

There won't be FFA PvP, but if faction players want to fight with as little equipment as possible, they are welcome to try. Bind rushing won't be possible, like Darkfall, as when you ressurect you are at low hitpoints and you have no weapon on you. You need to heal up, gear up, and return to battle. Those that use equipment to it's best extent will have an advantage in that regard, but they will have more to lose. The skill of the player, the skill of the character, and the equipment of the character will all play a role in determing combat capability amongst other variables. You can always avoid a fight if you are willing to make the necessary sacrifices. Pros and cons to every action.