[Disclaimer]: I'm writing this post quickly so excuse me if it seems hard to follow. I think the concepts are simple enough, but I'm happy to elaborate on any of it.
TLDR: K/D is a poor way to either display skill or deter players from dying, but it is the only system we have to accomplish these things. I propose a new and better system in it's place, and to completely remove both PvP and PvE K/D ratios. (Seriously give me one good reason not to)
Kills v Deaths is a pointless statistic. It prioritizes the wrong things, is easily manipulated, and tells you little to nothing about how good a player actually is. It's not only useless, it's also damaging in that it causes players to lose sight of what is actually important. You're incentivizing players to do stupid, meaningless things like leeching and boosting just by displaying the ratio. You can't honestly tell me that you think it's a good indicator of any type of skill whatsoever.
In my opinion, you should remove K/D for both PvP and PvE and come up with a better way to penalize deaths and reward effective playing.
I think that K/D is meant to do two things:
1. Act as a deterrent to dying, because other than this pointless stat, there is no deterrent.
2. Gives players something to show off and acts (very poorly) as an indicator of skill. (Or is at least perceived by some to be an indicator of skill)
If we are to properly substitute a new system, we should do so while maintaining these two facets of PL gameplay.
I suggest that for PvE, players should suffer gold loss upon death. Requirement 1 is satisfied as this will deter players from dying repeatedly. I would argue that gold loss actually accomplishes this better than K/D, because it reduces some of the stress or fear of dying and of having a permanent mark on your 'record' per death. Players will be more willing to do their jobs and risk dying, rather than playing it safe and letting the rest of the team die instead. Yet, no one will want to die repeatedly because they won't want to go broke. The amount of gold lost should be substantial, but not too severe.
I don't think that there is a stat that will fulfill Requirement 2 in PvE. You just can't make a rating that displays anything like skill at fighting computer controlled monsters. I think players accomplish this instead by collecting rare and powerful gear. As it stands, there isn't a whole lot of equipment in this game for players to show off. Shadow Caves may have been a good step in the right direction, but the terribly botched release of the dungeon, giving every player and their grandma a full set on patch day, greatly reduced the worth of those items. But my point is that the whole desire to show off one's epeen, which persists so strongly in MMOs, is best accomplished by attaining this sort of gear, not by showing how many deaths you managed to avoid, and how many lvl 1 mobs you wasted hours of your life killing.
You might think that a K/D ratio for PvP makes more sense and that it would actually be a good stat to have here, but i fully disagree. Not all classes were made with the same capacity to kill, and some are designed to support others as well as killing. Futhermore, ranged classes and classes with more AOE abilities are better geared to getting last hits. Giving kills to only the player who gets the killing blow drastically skews the credibility of this stat, because then the goal is not to outplay opponents, but merely to snipe the last hit from your teammates. PvP in this game is largely a team effort.
PvP is a little trickier to solve than PvE, because the current PvP system is pretty primitive, and lacks the infrastructure for a real, ratable PvP experience. The objective in arena fights should be to win. Now, I know you're going to say "Wooooaah Kiberian, that already is the point of arena PvP! Dude lol you win after 10 kills man." But no. Winning isn't the objective, padding your ratio is. Winning or losing is just something that happens after 10 kills, but it has no real effect on the game. People need to have incentives, and without incentives, you're just putting in empty, meaningless content.
I suggest that you try to orient the focus of PvP back toward your team actually winning the game. This is difficult to do because of how unstable the current PvP infrastructure is (Allowing people to join games midway, allowing games to begin before both teams have enough players, allowing players that join to see both the players and score on both sides and to actually CHOOSE (are you serious?) which side they want to play on.) Assuming some other changes to make PvP actually feel legitimate, and not like some side thing you just sort of threw in there, a ratio of wins v losses seems more informative.
It's hard for me to talk too much about PvP, because as I have said, I think the whole PvP system needs a rehaul. However, i think counting team W/L accomplishes both Requirements 1 and 2, incentivizing players not to die in order to win the game, and they still have their snazzy stat to show off.
So there. I think other incentives could be put in place which would be of much greater value than a K/D ratio, but these are just some that seem simple and obvious to me. Please ask questions or give suggestions, let's start a dialogue.