Even in real life when you go to a shop it is usually clear who is the vendor and who a customer.
Try lookinf for instance for the tailor vendor and you keep approaching all the players who stand around the same area doing their tailoring!
Or for instance I was shooting pirates on the beach and kept attacking players as well, thinking that they were enemies.
In 30 years of playing MMO's I have never had this problem, not even in really old games. I think it is just a lazy way of making a game. Let everybody wear the same armor and use any weapon they like. Well how is that for being lazy to create variety.
Make all dungeons free for all, no instances. How is tht for lazy production. But charge top bucks and monthly fee. Nice!