This is basically a set of simple ideas to balance PVP in such a way that uneven team sizes, gear strength, and team capabilities can be handled such that PVP is more accessible and functional even with a smaller PVPing population, but works even with a higher PVPing population.
Normalize all player stats to the same level
Each player in PVP should have his or her stats normalized to exactly the same level. By this, I mean some arbitrary level should be chosen (say 10.4) and each player in PVP should be balanced to exactly that level, regardless of gear. Gear differences are more the dominion of PVE than PVP, and having completely normalized stats removes one of the key barriers to entry of PVP, emphasizing player skill, build design, and team organization over gear grinding.
How?
The total possible stat points (primary and secondary) for the arbitrary level should be determined, and compared against the total points a given player has... then that total should be adjusted upward to create an equivalent normalized player. This will include all permanent gear stats (item, glyph, major signet) as well as uncommon level flat stat boosts from augments. Everything else can remain the same - temporary stat boosts from skills, on-use augments, etc.. are unchanged. The normalization process is repeated for a player any time they equip or unequip a piece of gear.
The Balancing Equation
Damage/Healing = Base * (1 + (0.2 * x))
Damage Received = Damage * (1 / (1 + (0.2 * x)))
Explanation
Though they may look complicated, all the equations really mean is that for each X (the balancing factor) a given player does 20% more damage or healing, and receives less damage.. not a flat 20% less, but an amount that provides diminishing returns. At 100% resistance, a player takes half damage, for example. The use of the x balancing factor just makes the calculation easy.
Balance performance based on faction populations
The existing balancing system doesn't do much to actually balance the skewed demographics seen in most PVP matches. The balancing system should make each team equivalent; for example, if one faction has 10 players and one faction has 5 players, then each of the smaller faction's players should be a match for two of the first faction's players. In this way, a given faction needs to commit an equivalent portion of the team to a goal to counter the other faction's identical proportion.
How?
The difference in team size is determined for each faction, based on the largest team currently in play. For each player smaller than the largest faction, the players on the smaller faction deal 20% increased damage and healing as well as reduce incoming damage by 20% (where 100% means half damage - see equation). Whenever a player joins or leaves the match, this bonus is recalculated for the team. For use in the above balancing equation, for each player less than the largest team, increase X by one.
Balance performance based on team achievement
I'll use Fusang as the example, as that is the most active PVP. If PVP were properly balanced it would be very, very rare to see one faction completely dominating the map, but that's what we see most days. Instead, we should encourage a high turnover rate for a map's PVP goals - in Fusang that would be Facility ownership such that if your faction controls fewer facilities than another faction, your faction is given a performance bonus.
How?
This is done the same way as population balancing. In fusang there are 4 facilities to control, so, for every facility fewer than 2 your faction controls your faction gains an additional bonus. Suggested bonus is the same as for population balance - 20% for each facility fewer than 2. In terms of the balancing equation you simply increase X by one for each facility fewer than 2 a faction controls. Anima wells are not considered for the balancing.
Summary
By normalizing all players to the same statistics level, and then applying less subtle balancing based on relative team sizes and map control, PVP can be made challenging to all PVPers but not hopeless for any faction. Map goals will change hands more frequently, allowing for more fluid and exciting PVPing as well as more reliably completed PVP missions. With such balancing in place, it should be rare to see any one faction dominating any PVP map, and in making it an actual effort to achieve anything past general faction balance, it will discourage people from joining PVP to simply soak rewards - there will not be high passive rewards for passive players, requiring an active participation to maintain a faction's reward level, but better incentivising participation by making PVP missions possible to complete for all factions regardless of size.
Additionally, removing gear variation removes gear as a barrier to entry, which will encourage more people to PVP and prevent those who do participate from quitting due to being badly overmatched by well-geared PVPers. Gear power is, generally, meant to allow a player to face greater challenges with a reasonable possibility of success.... in PVP there are no greater challenges to move on to, meaning that presently gear just makes PVP LESS of a challenge over time, which seems silly considering the faction performing the best is the one gaining the most progress toward making high performance easier to attain.