When it comes to CVC it looks like this to me and frankly are good rules for everyone to follow.
1. Setting everyone to hostile is perfectly reasonable.
Infact, unless someone is not in your party, everyone you meet should be hostile. Your not taking a nice little walk in the grasslands, your hunting and you never know who you'll meet. No-one should be insulted by being set to hostile. If anything, being set to hostile would show your intent. It can also be used as a great RP tool. It is also a way of warning players ahead of time.
2. Lower Level vs higher level or higher level vs lower level, its all fair. Just realize that you lose GP and XP for a 4 level difference and may go to jail.
3. You do not have to engage in CvC or Faction CvC. You can Run. And your choices for Faction CvC are determined by your faction and faction leader.
4. Be careful of someone casting a spell while they want to talk to you.
5. Becareful of someone who wants to talk to you and they are fully buffed, but you are not.
6. Discussing terms with the player quickly before the match can create good situations or RP. Think Real-life.
If a person wants to make you beg, they can't kill you. Tell them they need to being you down to 1/4 hp.
Betting weapons or magic items shows seriousness. I heard a saying..something about children do things for fun, men who are serious, seriously bet.
Perma-death, level loss, GP, Magic items, RP. All can be used to bet with.
This will also reinforce the idea of loss and realistic battle. Is the fight "really" worth it. Hence a fight with Mouse is Not worth it. Run.
7. Players who want to RP in peace should find a safe place to do it. The Metro Consulates is not safe.
Nor is any other major consulates. Factions are the most war-torn areas in the game.
8. You have different relationships with different people. Some will respect you and allow you to RP or even join in. Some won't and they will say that their attack is part of the RP or is the priority. Follow number 7 and you'll be ok majority of the time.
9. If you just want to kill endlessly without problems, go to the arena or CTF arena.
10. Retreating. The time to retreat is when you and/or party are down to 1/2 or less of your HP and you have barely scratched the enemy. 3/4's of your HP gone is when your guts are spilling out onto the floor. It is to late to run when you are near death.