What possible fun is it to go in to a mod with items like you described? If nothing can hurt you and you can kill at a whim, where is the challenge?
Personally, I would rather switch the game to enforce item level restrictions and no PvP if that would get rid of the PKers. I usually avoid PvP servers like the plague simply to minimize any chance of running into PKers, but I love what Z has done with Undermountain.