So I read the rest of your post now, good game idea, it's really hardcore but it's your dream game and I know many people dream of it too.
The ideas of guild system, the grounded leveling system & death penality are all really good, of course! depending on the world & how they interact with other systems.
As for reputation/karma... I'll make it as subjective as possible if it were me. You're not judged by how good/evil you are, but by how you affect the world around you... Something like "a town's greatest hero, is another town's dreaded villain."
like Final Fantasy XIV where your characters can do all the professions and all the classes, no specialization at all, your characters is just a copy/paste of everyone else that decides to do everything.
I'm sad that FF increasingly took this approach since FF7. I think I'll touch up on that in my upcoming FFVIII review (that characters no longer matter from gameplay perspective.)
I like your suggestion for the karma system, actually kingdom come has a similar system but it was pretty bare bones.
My username comes from FFVIII :-D I'll look forward to your review.
Haha, just noticed that!!
The area is my next destination in the game now (I play slowly and exploringly, so it might take few days for that.) Hopefully I remember to mention you when I write it!
I love the world and characters in that game so much, I replay at least once every 2 years!