Full loot can be hard to balance. Griefers plague these sorts of games. Below are a few ideas to mitigate this.
Have 3 loot consequences.
Inventory only loot.
Full loot enemy.
Inventory loot allies
Ally vs Ally no loot.
Invader vs defender
Invader can be fully looted.
Defender inventory only loot.
Make carried gear heavy and effect movement and ability use, so looter has to choose what he takes.
Carrying 2-4 peoples worth of gear should not be possible.
Give armor and weapons slots that are not as effected by encumbrance.
Make items dropable but only destructible in cities, castles, villages etc.
This way if you want someones armor you may have to leave yours or move really slow. Mount inventory could allow for more capacity but mount cant be despawned while it has items in inventory. No fast travel over weight.
Helbreath’s Zem system worked alright.
Full Loot PVP usually works against itself in these games, people usually don’t carry good gear if they are at high risk of losing it, and many that invested time into items and lose them to a player Zerg usually rage quit.
Another system I’ve seen work well is PvP points system where you gain for a kill but lose for a death.
I really liked Aion’s pvp point system, you needed a lot of points for items but you lost more points for a death the more points you had (Just another version of Risk for Reward which didn’t impact players hard earned items but rather the ones you plan to achieve.