Well, if they followed Roybe's suggestion and cut PvP out of the main game, and left CQC for PvP, they might have some time to be able to concentrate on PvE improvements.

I don't believe for a second they will do that.
Regards in-game consequences, I think one of the problems they have, is that they seem to want to push the illicit side of things. More than 50% of missions will potentially result in you getting either a Bounty for murder, or a fine if you are caught / scanned with the goods you are transporting, and recently, I've had system security sitting in a WSS when you drop in to find black boxes and the like, so it's just a trap. Perhaps they read that as Dangerous, I really don't know.
But since they are pushing / encouraging CMDRs to break the law with what content currently exists, if they start to penalize them too harshly, the game will be even emptier than it is now content wise. If they choose to isolate player on player crime, assuming they can do that easily, then Ok, but how long before innocent CMDRs get duped into killing another player and having their game ruined? Then they are back to square one, trying to plug exploits that they never thought of, because you simply cannot account for human behavior.