Best of both world's voice and text, get over it Qwerty.
I'd like to see a dynamic faction system in an MMO with more GM/special events that affect how the game world is shaped. I know someone mentioned it earlier but something similar to how the there are major family houses that control regions of a continent like inA Song of Ice and Fire, would work nicely.
Have 4 or 5 major factions associated with large regions of land on a continent (maybe each faction has their own distinct landscape, like north all snowy and whatnot). Within these large regions they could have lesser factions, where their allegiance can be controlled by player actions in both PvP and PvE. Obviously, these factions which are on the boarder regions of the larger ones would be easier to affect and change who they are allied to. As they change which larger faction they are apart of, how faction is gained and loss with them also changes. Keep it very dynamic, so that let's say a group of players assassinated the leader of a town and change its allegiance, it is remembered. The town and area around it are then more likely to betray that allegiance. The opposite can happen too. Individuals, groups and guilds that repeatedly help and contribute to a faction could have access to plots of land, control over the layout of the town/keep and how its defenses are and so on.
For the large region controlling factions, being allied to one and helping them control more offers more benefits to players. Your guild helps conquer a large area of another region? The guild has control over to how that area's keep and can restrict/set KOS to other factions, allow npcs from other sub factions to reside there, change the landscape or wild creatures there and so on. Of course, players would be able to change allegiances between the larger factions via betrayal of their old one, or just helping another.
GM and special events could be happen every so often to enhance the political dynamics. Like a GM could just launch a massive attack with NPCs on an area and players can aid in the attack or help defend, and how they participate would obviously affect the outcome. Maybe give the GMs a bit of freedom so each server is a unique experience.
In essence, I just want to see an EQ style faction system where all the factions are intertwined but are also changing.