The Daily Grind: How would you balance MMO PvP factions?

Earlier this week, Blizzard announced voluntary free faction changes for a single World of Warcraft server, presumably as a test for fixing the factional imbalances on that server and the many other servers and server-amalgams that currently exist. As a player on a PvP cluster dominated heavily by the side I am not on, I do welcome the studio's attempt to fix the problem, but I can't help wishing there were a less kludgy way.

I know a lot of players prefer three-way to two-way faction PvP in the belief that the two weaker sides at any given time will band together to defeat the larger one. I also remember older MMOs either locking overpopulated factions or offering huge bonuses to the losers to boost their abilities and morale. But maybe we can do better. What do you think -- how would you balance MMO factions? Are two-sided factional wars just doomed from the start? And would you use a carrot or a stick to incentivize player-driven balance?

Every morning, the Massively bloggers probe the minds of their readers with deep, thought-provoking questions about that most serious of topics: massively online gaming. We crave your opinions, so grab your caffeinated beverage of choice and chime in on today's Daily Grind!