That would be exciting, but it shouldn't be forced unless it is discouraged in some way. PvP in Dark Souls and Watch Dogs was annoying and I played offline.
The way I described it wouldn't force anybody. You could choose whether you want to do an old school regular patrol (default setting) or change difficulty to PvP (regular no level advantages) or hardcore PvP (level advantages). Fair for everybody imho.
That's why I said players should be able to choose if they'd like to be PvP flagged or not. Just like you can do in World of Warcraft for example. No one is forced to participate in open PvP matches, but for those of us who are looking for the extra kick, even with ganking involved, it's a great feature.