Fair enough. And yes, I recall that very phenomenon in MUDs. However, as you pointed out, the devs did wise up to it and have remained wise in FDs case.
ED as a whole is more or less immune to it due to the modes, and mode switching, so in a way Frontier nipped that possibility in the bud.
The Open mode, though, might not be immune to it. And, while that effect happening in a single mode would be unlikely to crater the game, which in turn would allow the affected game mode the time it needs to recover, the effect would still not be pleasant for the players that prefer the affected mode and would cause Frontier to lose revenue (and ED to likely lose development budget).
The ones driven out of the game might come back if the in-game experience improved for them.
Historically, players driven out of a game due to other players tend to never give it a second chance. UO, for example, saw only about 5% of the players that were driven out due to PvP even give the game a new try after Trammel was added — and, given that the game's pre-Trammel-era churn rate was about 70% of the players leaving within two months, there were a huge amount of players to try and get back.
So, it's in the dev's best interest to avoid unnecessarily driving players away. Regaining them tends to be very hard and ineffective. If Frontier detects that players are leaving due to what happens in Open, it's in their best interest to act sooner rather than later.
Now, if ED was a game that depended on thriving PvP to survive, this would be a death-spiral. It would be like nerfing first-person PvP in Battlefield. But it doesn't. PvP in ED is just one of myriads of play styles and if this particular sub-population of the PvP community no longer finds it satisfying, the galaxy won't care and won't miss them. ED won't die as a result.
The classic death spiral isn't about making PvP unfeasible in a PvP game; it's more or less the opposite, actually, making PvE not exactly enjoyable in a game where PvP is allowed but not the focus.
It's why, say, Planetside doesn't need to worry about it. Or even EVE; while PvE is possible in that game, the focus — as reinforced in about every piece of advertisement CCP does — is on PvP, which limits its potential player base but somewhat insulates it against the PK- and griefing-caused death spiral.