Instead of adding a new sail to the mast, it might be nice to repair the already-existing holes in the hull. It would be amazing to be able to use hoppers and anvils again. It would be nice to not have these severe lag spikes that seem to be happening nightly. It would be nice to get horses working and PVP vibrant again. Arenas, quests, duels, balancing of classes, & empowerment of professions...the plate looks mighty full already.
Anvils arent available due to the API being bad, and Hoppers create exploits.
The server spikes cannot be controlled by Kainzo, they are the datacenters problem, not much Kainzo can do here, other than moan at the datacenter.
The idea of the factions was to get PVP going again, so you're contradicting yourself there. The Horse plugin is in development, Arenas are coming back and classes are pretty well balanced.
So really, your points were sorta lacking...
However, i do not feel that Factions belong in HC, at least not in the normal form.
You could possibly do something like creating official alliance groups, in which towns could join, and then have objectives within the world that alliances or towns could attempt to complete, i.e. "Kill x amount of players from X", though i would hope that would be given a level requirement to stop mastered players camping low levels to complete this. Obviously rewards would be given for completing such objectives.
You could also have defending objectives (if possible), such as "Kill X amount of players whilst in [Their Town]".
EDIT: Also, i would love to see an official Guild plugin on the server, much the same as the new Township plugin coming soon, but obviously adjusted for guilds. This would also boost PVP tenfold.
I do like the ideas malikdanab has suggested too.