I just briefly read your initial post, but I think I have the gist of what you're saying. I might be wrong, but I'm pretty sure all of that could be done pretty easily just using perl to update your database.
This is by no means the best way to do this, but it's just quick way off the top of my head.
For instance, in a two-faction world with multiple cities... let's say 3 good and 3 evil cities (You would have 'good' and 'evil' factions in your database)
You'd need to create some type of criteria for 'defeating' a city (ie. killing a boss mob or a certain percentage of NPCs)
Create a new table to keep track of contestable cities and the current ruling faction.
Lets say an evil faction defeats a good city. So update NPCtypes table so that all NPCs in defeated zone are now ogres on the evil faction. Update your new table so that the evil faction now owns the city. (It's late, I hope I'm not forgetting anything.)
I would set it up so that each faction has their own completely safe zone that they respawn in when they die, from that zone they can use an NPC to go to any city that their faction controls. So, potentially, one faction could capture all of the cities and the game would end as the other team could no longer leave their safe zone.
Wipe the server and start over
That actually sounds like a pretty neat idea. And again, I don't see any reason you couldn't do all of that with perl.
Personally, I'd couple it with arcade-type play (fast leveling, spell scribers maybe), but that's just a really rough brainstorm; there are probably a lot of problems I'm not seeing here. It's late :p
Seems like it would be a lot of fun if it was done right, though.