Every server I've tried has been a pve snooze fest that lingers for a little while then dies. The only pvp server was a p2w mess and it was only max level players fighting each other in bgs. This theory you have that a" small community will devolve into a toxic place full of self-centered players" is doubtable. Small communities tend to stick together.
pve players will be able to shut down any toxic outlaws because they all can work together with blue names to stop the one red name person with the big outlaw icon on their mini-map trying to be toxic.
For the most part a pvp server has longevity because players are driven to do pve in order to defend themselves when pvp comes around, which gives them a rush of adrenaline and a welcome wake up from the pve grind that can get boring without any real threat of danger. The world is big enough especially in a low population that pvp wouldn't always be following them anyway.
While a pve server will have people consume pve content like locusts and then leave to play a different game once their pve content dries up. The game's most exciting core design revolves around world pvp. It's a disgrace when servers turn that design feature off out of some paranoia that one bully will be mean to other players.
This could also be solved by having 2 channels on the same server, one channel with flag-on pvp for people who want to be outlaws and one channel with pve settings.
A pvp server doesn't mean everyone has red names and fights each other, it still has all blue name players, unless someone flags pvp-on then they can be attacked by all the blue name players, because they are an outlaw. A pvp server is still mostly a pve experience because pvp outlaws are scarce, but once in a while there is an outlaw for the community to fend off. It's all around a more adventurous experience.