Got to agree here - killing an NPC character is now, and should continue to be, no different to killing another CMDR within the game's logic, because in-universe those NPCs are pilots, too.
Actually, the game as originally described by Frontier was supposed to have far harsher penalties for killing a player than for killing a NPC. The in-lore justification would be that the Pilots Federation all players are a part of would set extra bounties on those that kill its members, and otherwise punish them.
Also, IMHO keeping the consequences for killing a player equal to those for killing a NPC is a bad move. NPCs just spawn with their fully equipped and loaded ships, so they are inherently different from the players, who have to deal with persistence, loses, etc. Make the NPCs follow the same rules as players, having to grind up to better ships and gear, having to pay insurance and re-purchase their cargo after being killed, and I might agree with equal consequences for killing both, but as it stands right now keeping the consequences the same is just asking for trouble.
(Fully simulating NPCs under the same rules as players would have an interesting, positive side-effect; it would highlight all role imbalances and force Frontier to better tune death penalties and rewards for all game roles, otherwise the NPC population of certain roles might start to thin out. I don't know how feasible it is, though.)
Never remove anything, nor change anything about OPEN as it is right now, leave it exactly as is.
Simply add another option: OPEN PvE - where the only difference is player shots do not harm player owned ships. That's it. Everything else exactly the same.
I would do it differently for Open PvE:
- Ramming damage disabled between player ships.
- Shots from a player that hit another player do damage to the attacker's ship instead of the target, preferably with some warning to indicate why the attacker is taking damage.
This would achieve the desired intent of eliminating PvP without allowing players to just shoot blindly into a dogfight.