I have to say I actually like this idea, but only if the rules that have been stated not only work on the effected faction, but also its allies and if any allies of the offended party are around the offended partys units start attacking the attacker.
Ex. A RFP encounters a Junker smuggler outside of Bonn station, the junker tries to make a break for it. The RFP uses the attack command on the junker. Not the RM stationary BS and Rheinland corps are hostile to him, but Bonn and Bounty Hunters are not because they are not because they aren't directly allied. However a Junker NPC pattrol is passing, after seeing this the Junker NPCs are hostile to the RFP player and start attacking.
To help prevent abuse it could be made so only players with a matching IFF and ID could use it and over a certain level. (Forty maybe?)
Or even better, we restrict in to Guard IFFs.
YES! To use it you must have a factions guard IFF and a faction ID (Guard or no)