People entering the game are the ones who increase the population, players come and go from endgame. I understand that the duping incident made some people quit permanently but a large number of players were not directly affected as they were not endgame.
Once you've poured a large amount of cash into the game its much harder to quit due to gear loss than it is when your leveling. Some level 50 who loses their blue staff that they just obtained from a group quest/instance is much more likely to quit than an established endgamer.
Yes there used to be large server wars but that's mainly because in chapter 2 it was possible to level and remain a red in endgame. With chapter 3 came Dalanis (impossible to get into as a red), +12 (stupid crit %). These greatly reduced the number of endgame reds, who either changed to white or quit. Because of that these wars do not occur.
I was absent for the whole impenetrable thing so I cannot comment on it, but back when I was in Dragonlance we used to kill people trying to do HoS and I don't think anyone quit directly from that.
Finally, I do think this is a good change as it will definitely increase the NEW player population, which will in turn increase the endgame population.
I wasn't around when Dragonlance was the top gun, I have only been playing on Grimdal for one year.
From what I have seen is that wars still existed between DL/Apoc/PKB and Impen. It was going on every day with fights at the res stones.
The reason why the PVP ended on Grimdal, especially past Chapter 3 was because everyone would rather AFK the events instead of fighting each other for fun.
Mementos ultimately created a very lazy population and encouraged them to AFK for their rewards. Grimdal didn't have the population to support such a laziness and once people wanted to do end-game, it was left to the people who actually knew how to play the game and the ones who got carried only quit shortly afterwards because it was too difficult.
PVP died very quickly on Grimdal and the only thing that kept the PK'ers happy was that they could get gear from other players to help close the gap between end-gamers and lazy people.
Right now, the only thing that could potentially fix the problem is to fix the PVP-system so that it encourages fights and it encourages people to have fun outside an instance without losing too much.
We should not drop our gear (as an active PK'er, who has made people drop gear worth $200+, it's hard to say this.) but Grimdal needs it and I am sure Indigo deserves it as well.
We should drop the contents of our bag, we should not be able to hide stuff in our transmutor.