Imo, they should retire the system as it is and just turn it into more a reputation thing that works similarly to how it does now (basically non-time gated reputation.)

That would also open up the possibility to add other factions like Ishgard and Ala Mhigo, which should be options already anyway. Maybe even add Garlemald, Thavnair, Sharlayan, etc.

"Repping" a faction could work exactly as it does now for PvP, since everyone is always a freelancer you don't need to keep it to just three on the player side.