The OP, and many who have posted in support of him, are absolutely correct here. The bottom line is simple: if there is no risk versus reward metric for PvP, with both individual and broad scale implications, then PvP is just an e-sport.
One note before I go any further: there's nothing wrong with e-sport. It's just that if I want that, I'll play a shooter or RTS. This, I think answers the question PvP players always get from the hardcore PvE community of, "if you want to PvP, why don't you just play a shooter?" The answer that I want my actions to have consequences. I want my destruction of you to mean something, and I am willing to risk that my loss will mean something as well.
This is something that I have come to believe that many PvE players either cannot or will not understand. The hardcore PvE player defines his goals around the repetition of an action, the raid, which carries little risk and perhaps some reward, but has no broader impact in the game. For whatever reason, this is what they want, and they will not accept that other people enjoy different aspects of a game.
Because developers want to maximize subscriptions, they will attempt to cater to both playstyles. Because so many hardcore PvE players are so risk averse, and because they make up a large faction of the MMO community, they have a strong impact on developers' ideas. And so, developers attempt to cater to both by separating the predators from the prey. There are grazing areas, and there are violent colluseums, but the world is segregated. This is the WoW model, and it is not reflective of what we would call a virtual world. Rather, it is a collection of different games on a single server.
Developers can make the arena as "fun" as they want, but they will ultimately fail to deliver what the PvP community wants so long as they cannot influence the greater savannah. Further, because a segregated world is so unnatural, developers who choose this path cannot make a virtual world. The beauty of a virtual world is that it creates all sorts of interesting emergent play, like virtual economies, which are actually beneficial to the non-PvP player.
If the hardcore PvE player would have a bit longer vision, he would see that, if he would give up just a bit of safety, the returns, in the form of emergent gameplay, vastly outweigh the loss of absolute security. This is something that PvP players understand because they are familiar with risk versus reward metrics. The PvE player, being less familiar with those metrics, and having been catered to by games like WoW, are understandably less equipped to see this natural outcome.
Now, the difference between the real world savannah and the virtual one is that, in the latter, the gazelle's have the option of not playing. So, the trick is to set a balance point where gazelles have lots of grass to graze on in safety, but the best, or certain unique grass, requires venturing into the savannah to obtain. The penalties must also be balanced; they must sting, but not so much that the risk versus reward metric causes gazelles to never venture into the savannah, or worse, that they simply choose another game. This is the integrated approach that games like Eve do so well.
Many will argue against this position, but it is because they are gazelles. They want all the grass in their safe pastures and to leave the lions and hyenas to just fight, but without the reward of any tender meat. Of course I do not blame the gazelle; it is human nature to argue in your own self-interest. However, if we continue down this road, then MMOs will continue to be just games and not truly virtual worlds.