Yea devs have odd thoughts about this "conflict resolution", I think that #1 reason why people don't build palis around everything is that its quite tedious. Not pvp reasons.
What does pvp even provide for average player? The risk of being ko+robbed with high chance of death due to pre existing wounds. Possibly losing your ship, possibly getting raided also and losing everything. Not very nice.
PVP doesnt have to be completely removed. Instant kill/ko as a player interaction should be made more punishing. Siege should be made basically impossible for the attacker.