[dayute]

I like the variable point system but I think it might help if we take it a step further. If a player that is many levels higher beats a much lower level player than instead of just the lower level player losing a respect point, make the upper level player lose a point as well. That way people will stick to attacking people their own level or nearby.
If you think about it in real life. Say Mike Tyson kicks my arse. Sure I'll lose a small amount of respect, but shouldn't Mike Tyson lose respect too? I would respect the big strong guy less for beating up on the defenseless weakling. Make it say -1 respect for both if the players are 3 or more levels apart. -2 for the big guy and -1 for the small guy if there's a five level difference and so on.

::Beats up on 12 year old, loses five respect points::