I hear you, how about a ghostly shadow. When the player disappears a translucent slightly glowing shadow of the avatar remains, and then accelerates towards the destination until it run into the player. That way you get a representation of movement that is still visually similar to the avatar, but because it is a ghostly visage it doesn’t have to strictly follow the “physical” rules of momentum.
As for the developers not planning on making the game this crowded. That will really all depend on the players. Since you, Mr. Epic Founder, are already aware that they are including fellowships they will get beat up by the community if they can’t sustain player densities capable of supporting fellowship gatherings and group adventures. So unless they limit the fellowship size to a dozen or less, which would make your investment worth very little beyond bragging rights, they are going to have to deal with densely populated areas occasionally.