For me, Elite should have always been multiplayer - it just couldn't be because the sort of technology needed is only just becoming available.
Another upcoming game springs to mind here - Planetside 2 - they're following up on the only game that's ever tried to make an MMO scale game where you had direct control (by which I mean you fight by fighting, not clicking skillbar buttons). It worked in 2002 just about, but it looks like the internet, PCs and indeed gamers themselves are ready for it to work properly in 2012.
I'd like to basically see a refreshed attempt to model our milky way, lay over the top of it an EVE style sandbox with as much of everything driven by the players as possible - some NPCs might be needed, but players themselves should be able to fill all NPC roles. The major difference would be that with Elite, you have direct control over your ship.
As far as PvP goes - of course. Any 'corporate state' or inner systems should be locked so that people can go about their business in safety and low risk (including from NPCs). More outer systems should introduce PvP away from the planets and bases and even further out should be full on.
If you make it so that everyone can play the same game, but everyone can choose whether or not (and how much) PvP they get involved with then the game will be all the richer for it.
I think death would be easy to handle in this game. Everyone would need to get an escape pod as standard and when you're blown up, you end up floating in space in it where you died. You can fly it like a ship, but it can't be killed or collected and you can use it to jump back to somewhere safe or maybe radio for help (perhaps it can be collected if you consent to it?).
When you blow up, any cargo you had on board has a chance of being lost to space or just being lost in the explosion (maybe depending on circumstances) and can be collected, along with other random metals and scrap by the other player(s), or by yourself if they're not interested and you can get back there before anyone else finds it.
You keep any credits you have since they're automatically in your 'bank'. Everyone should get basic insurance which gets them back in a starter ship, but insurance should be upgradeable to ensure you get a like-for-like ship replacement (you could just buy a whole new ship, but insurance would be cheaper).
Insurance should be available on components you added to the ship to replace them at a lower cost, and you could insure cargo for trading runs so you don't lose out on everything (much as ship captains in history).... Thus allowing you to take a risk for bigger profits or mitigate your losses if you expect trouble.
All seems fairly strightforward to me
