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I think this would be more appropriate in frontier or exploration games where the cities haven't been created yet.

I'm not saying it's a bad idea but my "dream mmorpg" goes in another direction, where the whole world is fully handcrafted in every detail instead of randomly generated. This mostly to overcome technical hurdles, like to prevent the effect of UO or SWG where the world "fades in" as you walk, which destroys every impression of persistence.

So all the buildings are already there, waiting to be conquered and used and only offering minor upgrades and customizations.

Your idea doesn't seem to have much of a lifespan, as after a week or so everything is probably going to be "discovered". What's left for players who arrive later?

And how you justify the development of such a system if it loses its weight after the first week?

There aren't many mmorpg based on the exploration, and it can be an interesting concept to develop. Not for PvP, though. As I think that PvP is about "managed space". Finite. Known. Where the players have full control.

You could break the game in two moments and consider the "exploration" as part of the first. Firstly there's the PvE, as the conquest of the new world, then the players settle and the PvP starts.

But again you are dealing with a system that remains transitory. It's not too far from a description of a Warcraft match. Where you explore, settle and then wage war.

It's just not too appropriate for a persistent world and rules that should retain a value in the longer term.