This was the main issue for me with Darkfall. Well, this and searching for hours for PvP, and being "forced" to macro every hour of the day we weren't active just to stay competitive, but I digress.
The downtime could be HUGE if you didn't have a large supply of decent gear in your bank. First you had to farm the ores to craft the armour, bow, staff, 2H weapon, 1H weapon and shield, then you had to skin the materials to enchant it all, then you had to farm the reagents for all your spells. Oh yes, you needed to farm bushes for a mount too. And food. And pots. If you didn't have one item you needed for PvP, you were screwed. If you weren't carrying the right gear, it could put you at a massive disadvantage.
After all of that farming / crafting, a few of you could run around searching for hours to find someone to kill, only to run in to a group of 20/50/100 heading to a siege, or just out looking for people to gank.
I have no issues with full loot, as long as gear is not a chore to obtain. Personally, I think Shadowbane had it right. Perhaps something like the Shadowbane system, with irreparable gear, could be the answer.
Full loot did give me a buzz, and enhanced the PvP aspect, but it was such a ballache to replace items that we ended up spending far more time crafting / farming than PvPing.