This would incentivise (more so) the long wanted ow-pvp dynamics, a new activity for all within NW, while not disrupting the existing PVE players who may want to just chill, chop and farm for that day.
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I can imagine some day each region is full of ppl from same faction fights only happen when Zerg encounters Zerg. Therefore, things will develop to the situation in Picture 1, where zerg of people from same faction sweep the whole area like locusts. Fight doesn’t produce reward, chest does.
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Giving more reward to PVP Flagged players only results in more Flagged PVE activities. But this charm only belongs to a minority of players, like a person in a strong company who can always find a well-equipped group to fight. Some one would say ‘That’s the charm of open world pvp!’. That’s why most popular pvp games are happening in a fixed area. The real fun come from PVP only exists in Arena like outpost rush, where everything is equal. And those factors don’t contribute to FUN experience because it’s so uncontrollable. The open world pvp is affected by various factors like number, environment, weapon&gear. The reason why people don’t flagged pvp in open world is simple: It is just BAD.