I also have to disagree on leveling.
First of all, you know you're going to have people bragging about their high levels. It's inevitable. Like others said, this will take away from the RP/chat community that I'm excited for on FH.
One of the reasons I love FH so much is that it's not 'just another leveling game.' Almost all of the free games out there involve slaughtering some prey/a monster or whatever and gaining XP and moving up levels and blah blah. FH doesn't have that and creates a more fun, creative community.
I do, however, agree whole heartedly with a PvP system. I have nothing against a 'health bar' like we had in IT. That could effect that, and the PvP system would be great for rps in which your char fights another, without the random slashing and no pain giving that we had on IT xD And yes, no random attacks. A whole "Player A wants to challenge you. Accept?" popup would be perfect.
I'm on the fence with territory. It sounds really fun and cool, but there might be some fighting over territories and it could lead to lots of drama. Plus, if you REALLY want a 'territory' for your char/pack/pride that badly, you could make a map to distribute C: