Honestly, atm the Rep/MC system is kind of shitty for RPKers(punished w/ no broker & long rez walks for their desired playstyle) and non-RPKers(no benefit for their desired playstyle because blue-flag is meaningless) alike. The only people it benefits is the people that want to abuse the convoluted flag system while running parcels & watching MC timer, which consequently, is a lot of the player-base. It creates an uncomfortable situation where the blue flag actually means absolutely nothing, and, like you say, you can really expect most RPK groups to contain a large amount of blues.
The only argument you can make for the current system, imo, is that it's a place-holder and functionally will be better when fleshed out... Then the question is, why don't they finish implementing this absolutely crucial mechanic instead of giving us new magic/dungeons? Even just making rep numbers bigger & losses scale depending on the MC count of the people being killed would be a huge step up from what we have currently. That way, at least there would be a functional difference between a 0 MC blue & one that skirts outlaw status constantly.
I've said it before, but I think the game suffers tremendously from the PvP mechanics atm. Being blue should mean something, being red should not be punished with tedium, and players who are not interested in RPKing should still have access to PvP. You really can't blame people for RPKing when that's really the only venue the game design creates for PvP.