I also like the idea of having more conquerable islands. It would promote more wars, but maybe in the long run, we would be better off. More bonuses would be nice. I understand that this would be a huge problem, but what if the island holder had it's own drop rate? It could have a chance of dropping items off of mobs, not dungeons of course. The items could be posted on the market automatically, and the kamas of sold items would go to the nation's treasury?
Lastly the no government idea. I like how we have the freedom to be a governor. Would this idea be something temporary until a revamp?