No PK drop system is going to be newbie/population friendly. Its a compromise so the people who want no pk drops on pvp servers probably would not like the idea, and pkers who like to hide behind costume gear probably wouldnt like the idea either.
Using this formula lvl^2.5-850
level 15's would drop 21 gold 10% of the time if they are not red
level 67's would drop 35894 gold 10% of the time if they are not red
So gold dropping can be pretty newbie/population friendly compared to the PK dropping alternatives
I cant speak for level 15's who go on a killing spree than quit because they turn red and start dropping gold 21 at a time. To me this person wasnt going to last long anyway.
Of course a key factor in all of this that no one mentions is the power scaling in RoM, which is LESS level based and MORE stats based.
When all is said and done, dropping or not dropping isn't the issue. That's simply the result or not once the issue is concluded, that being someone died or not. A problem in RoM is the unfettered gear enhancement paradigm conducive to complicating the issues of balancing, as well as mucking with the benefits (or not) of having a 5 level gear drop "protection" in place.
I'm sure no one here has seen a 30 running around with 35K in HP taking out 50's, right?
Runewalker must institute bracketting of enchants/runes onto gear to
regulate how far a level (X) can boost their stats over their "peers". Say use a system of 10 levels to regulate what items can be applied to what gear.
Institute nullification of drop of anything if the given "victim" is struck by anyone over 10 levels. This will alleviate the "clever" sidestepping of the 5 level rule by those who escort their alts with high level characters and/or team up with lowbie friends on their high level to bypass that rule.
You want NEW PLAYERS into the game. That's lifeblood, plain and simple. Someone new to the game will be more prone to leave if they feel they can't even participate / compete the vast majority of the time unless they agree to be enslaved to the idea of an insane grind for months and months.
In my personal opinion that idea surpasses and overcomes the issue of gear drops or not. Because of the unfettered gear enhancement paradigm in RoM you establish,
by design, a game-play paradigm guaranteed to generate a collapse of the game once "critical mass" is reached.
And that "critical mass" would be the establishment of the "Inbred Hillbilly Syndrom" cliches: That smaller segment of the playerbase who ground 24/7 or paid tons of real world $, or cheated (an endemic problem in RoM) to gear twinked toons to the nines . . . . so they could turn around and farm lowbies and newbies to the game.
So, regulate ez-mode, regulate how much benefit can be had from cheating, to enable partcipation in competition. Meaning danger for everyone is more, as opposed to less true in PvP, and you automatically mitigate the "fear" of losing gear to opponents.
People can climb the levels as they want, everyone has their good guys and bad guys, higher levels earn advancent to higher levels, lowbies get to taste of PvP goodness at their levels instead of being slaves to the grind and being roadkill.
And gear drops can come back, because the give-and-take of drops will be somewhat more distributed, as opposed to funnelled.
Just some ideas anyway.

In the spirit of The Think Tank and all.