Now, when you enter a town, you cannot carry in your weapons and, therefore, not attack people. What I would like to see are separate "PvP Districts", where you walk into town like normal, except you can attack others in the town. Ultimately, it would be like a large Free-for-all arena, with merchants, storage agents, etc. thrown into the fray.
The targeting would work somewhat like the targeting of animals in the instanced zones. All come up originally as "friendly", but if you attack them, they attack back and are then targeted as an enemy. In the District, the other players would be considered "friendly" until:
A)You attack them
...or...
B)They attack you
In the PvP districts, when you die, you would either wait there for some kind monk to ressurrect you, or you would have to map out to a non-PvP district of any town. If you die when you were the aggressor in the situation, you have to wait 20 minutes before entering the PvP district again. If you were the victim, you have to wait 10 minutes (Edit2)
I would also like to see a certain graphic implemented that changes on whether or not you are an aggressor, defender, or if you aid somebody who is being mugged. For those who are virtuous, there could be a gentle glow around their head. For those who have been attacking people and been a general nuisance, they could have black mist around their head.
In the PvP Districts, the number of people would have to be a little more limited than in the current cities (perhaps a cap of 50-60ish), and perhaps only the larger and more popular cities would have these districts (Like Marhan's Grotto wouldn't have the districts, while Droknars Forge would have them).
Edit: One thing I forgot to put it. If you successfully kill someone, then they will drop an item (not worth any gold per-se; just a way for serial killers to gloat
). It could be something like a skull, or perhaps their garments in tatters. Maybe you could even "use" it and it creates an animation (just so long as it has no affect on real gameplay). Or maybe you could just use it as a Guild Hall decoration 
Edit 2: I like EmperorTippy's idea. Scratch DP. If you die, you have to wait 10 minutes before reentering any PvP districts (20 minutes if you were the aggressor)
