I don't agree completely. But this is very well written and he certainly has a point.
I haven't been here for a while so I just read all the PvP posts at once, and I think a very important point has been missed regarding why people do and don't kill each other in games and why they do and don't kill each other in real life.
In real life, everyone is living a life. If you think that you are playing a game instead of living a life then you have a mental illness. The primary reason we choose not to kill each other is not the punishment we'd get (stronger and weaker punishments don't affect murder rates), and the fact that nearly everyone agrees that killing is wrong cross culturally suggests that it isn't really just a cultural thing. We see other people as being like us, and we know that no one wants to die.
In a game there are two equally valid points of view on the matter of killing other people: 1) we are playing in a virtual world and so we treat our character as having a life for the purposes of the game; and 2) this is just a game.
When you create a persistent virtual world you want to encourage the former way of thinking. Allowing PvP seems to do this because it makes the world more like life. However, nearly everyone who actually wants to run around ganking random people is playing the game purely as a game. They probably are just as appalled and terrified by the idea of murder as you are in real life. But this is game, not life, and for many of them the fact that someone on the other end of the internet is upset by being killed just makes it more fun: after all, that person is overly emotionally invested in something that is "just a game."
You can't put in restrictions to prevent these people. If they kill someone they risk punishment from the community? Who cares, it's just a game. Anyone who has played Grand Theft Auto for long enough has at some point gone on a murder spree to get the army after them so they can try to steal a tank. The penalties imposed on these people by the community are not going to be any different. It may scare away some people who aren't that great at games, but a lot of these people will probably just relish in the challenge.
Part of your solution is to make it not that bad to get ganked by making cheap starting equipment serviceable for most purposes. That just means that it isn't that bad for the ganker to get killed back, since they can readily run out and kill people in cheap starting equipment. The difference, again, is the gankee suffers both in game and emotional loss when they die. The ganker suffers only in game damage since it is emotionally equivalent to falling into a hole in Super Mario Bros.
The reason to disallow open world PvP in a virtual world is because this kind of PvP attracts the sorts of players who would rather play a game than a virtual world. The greatest possible threat to a virtual world is to have a player base full of people who don't want a virtual world, but would rather just have a game to play. If you attract these people to your game, no system of punishments and balances will fix the problem. Just tell the would-be gankers to go play counterstrike.
Added "Eat your Tanking or you won't get your Ice-Cream" to the Link storage.