My answer to Phoneix is pretty much what Brandon said. Having a system were a massive event/action (Killing the Emperor, Winning the Great Hunt, Etc) Increases your level to 3/4. And vice-versa, if you get overthrown or go into hiding it subsequently drops down. I think you could tie this into a relative power=rank system. But the system should not be extremely stringent, following Phoneix's example, a Padawan should be able to challenge the Sith Emperor, but it will be extremely difficult almost impossible. I know some PvP can be salty, but I think overall people have the common sense to understand the difference in power an Emperor would have to a Padawan.