Sounds like you have some pretty cool ideas regarding PvP! Also, its nice to see some solid explanation of some of the more technical mechanics that will be coming to the game.
While it sounds like you are already have a good idea of what types of penalties there should be for both dying and killing other players, could I make an argument for having very minor penalties for both cases? There is one game I am thinking of in particular with a low-stakes open-world PvP system, and I think it leads to some rather interesting behaviour. The game I am referring to is “Wakfu” by the French developer Ankama. It is a game with a pretty small player base (similar to what I would expect an early VR MMORPG to have), and while the game itself has some problems (glitchy, mismanaged) a lot of the fundamental ideas in it are pretty unique and interesting.
In Wakfu, PvP works like this: PvP is allowed anywhere outside of the bigger cities and the starter island, and can be initiated by one party without the consent of the other. In order to attack someone, you need to first turn on PvP mode, which is visible to all other players (referred to as “putting wings/flags up” because the indicator has two flags of varying size depending on your ranking - not important here). While in PvP mode, you can be attacked with no penalty beyond the usual PvM death penalty, which is just a slight debuff for a short period after respawning. Being attacked while not in PvP mode and dying has the same penalty, however your attacker is marked as a criminal, forcing them to remain in PvP mode and causing them to lose access to the fast-transport ability until their crimes are cleared, which can either be done by someone else killing you or by serving out time in jail. Criminal status is tracked in each zone separately.
There is also a faction system involved, and attacking people within your faction is also criminal, but that system as a whole is pretty complicated and not very important to the point.
Due to the very light punishments for both dying and for criminally attacking someone, this results in attacks being done not for monetary gain or some direct reward, but rather for more abstracted reasons. For example, if you are competing with someone for resources but you are confident you could overpower them in a fight, you are able to do so and claim the resources for yourself. Attacking someone unprovoked is universally recognized as a jerk move though, and the victim could easily seek help from stronger, more noble players. Things like that happened pretty regularly when I played the game, and I thought it was an entertaining side effect of the PvP system they had. From what lore we do know about the game, it sounds like the faction system you are putting in place could provide some incentive to engage in “safe zone PvP”, too.
If you do want monetary reward to be a part of PvP, I think the “soulbound” equipment idea is solid, letting people adventure into PvP zones with some risk, but without worrying about losing their equipment, but I think having PvP in “safer” areas with no consequence to the victim and only slight consequence to the aggressor would promote interesting gameplay. Just a thought.