I think there are some non-retarded ways to have large PVP that doesn't turn into blobs. For example - no tab targeting, using collision detection for projectiles, swings, and even player bodies standing next to each other. You couldn't have two hundred people hitting the same door, because only realistically say 10 could get close enough lined up. This would force the fights to be small focused fights that happen out around the map or whatever as well.
However, then of course you run into the "but this is an internet game with latency" and even with a high speed connection, it's hard to get real-time interaction like that with large player counts. I just don't think it'll ever work well in this genre (it being large scale player battles).