unless pvp materia is also made relevant I really don't see the point of making morale relevant since pvp gear is unnecessary when it's all capped and doesn't add anything.

That out of the way, how about making morale effect your respawn time? E.G 10 morale = -1 second off your respawn.

Would be interesting to get you back in the action faster and makes sense cause having a high morale you'd rally quicker.