Well, I apologize for not reading the whole discussion (not enough time right now), but...
ID system was intended to allow certain freedom within certain limits. There are three main limitations that ID imposes. First is roleplay status. The faction should be lawful if it has lawful ID, should be unlawful (not essentially pirating) if it has pirate ID. The faction should have allies and foes similar to its NPC affiliate (Kusari Navy faction cannot be friendly with Bretonia Navy or BMM or Mollys, for example).
Second limitation is the location. Gaian faction cannot reside in Rheinland, obviously (even if they got no faction system, they shouldn't be interfering into what's going on in remote regions - at least, on regular basis).
Third limitation is ships and equipment being used. Again, there is some freedom allowed regarding equipment, but with ships it's better to follow ship series that NPC faction is using. Right now, every ship series from original Freelancer has its level 10 heavy fighters. Weapons... well, you should definitely use at least several native weapons.
I know that ID system looks a bit illogical due to the fact that ID item doesn't influence reputation in any way. I cannot even make NPCs to scan for it. However, this item is required... and one of the primary reasons is the fact that changing actual reputation in-game doesn't work in the way it should (hardcoded). That's why new rules require to scan for ID before a PvP attack. IDs are more persistent than reputations. They do look less obvious than in-game [tag], but at least they don't cause confusion like players having different mutual reputations. So we will have to enfore using them...
