nice idea, but for some reason, blizz seems to have built the entire game loot system around the auction houses. Do you really think, they'll change this with pvp items?
They probably will want to get more money from rmah fees. Considering everyone has already paid for the game, that's the only way to make money.
I agree on the mechanics, that damage cannot stay the same way, but designated pvp items? Not sure what that would accomplish considering you also are for a change of damage mechanics in pvp situations.
edit: also shouldn't pvp item rewards be gained by playing / being good at pvp?