I've mentioned this before in 2 other threads but never made my own either way this is how things should be done. Firstly taking everything they have done since september (nerfing crap) reversing it all and stopping what i said back in sept was a pointless futile effort.
Now for what needs to be done pve and pvp sets need to be separate from each other as this is where the majority of the problem arises. To achieve this you simply reduce regens within pvp zones and modes between 45% and 75% (exact numbers only known after testing and may differ between magic and stamina) then creating pvp sets that will not unbalance combat within pvp. Wearing these pieces should give a boost to stat pools per piece within pvp zones (doing this provides a burst damage model over a sustained damage model). Create 3 craftable sets within cyrodil to get everyone started closely monitor resource amounts and damage outputs to determine the amount each piece should buff all pools. Some pieces can be used in pve and pvp like 3 piece jewelry sets maelstrom and master weapons maybe monster sets (probably not).
Once you have this setup this way it is just a matter of tweaking the buffs gained from pvp only pieces (reason for reducing regens and boosting stats if someone tried to use pve only gear in pvp they would get wrecked endlessly and be forced to use the appropriate gear. Since the buff is only in pvp zones the gear is useless in pve). To be perfectly clear you reduce regens massively and nearly double all resource pools refrain from overly high defense buffs in pvp sets. Doing this will give a smooth easy nonconfusing divide between the two with little to no extra work involved.
Another good idea for pvp may be to change move functions for instance knock downs binds fear etc should probably be changed to a generic increased damage till broken free of debuff. This will fix pvp being nothing but knock down and slaughter before they get up tactics may not be necessary if health and other pools are increased enough.
Addressing pve
Once all the nerfs have been changed back increasing stamina gain from heavy attacks without nerfing the damage would be an important change once cut free from pvp you can make sure both stamina and magica based builds can actually finish a mob and move on to the next 1 seamlessly reduce potion cooldowns in pve back to 30 seconds would be nice as well once this is done just move on as you were before this mess. If some people or groups are still feeling unchallenged and they will you add a 3rd more difficult difficulty setting that gives them a chance at a gold drops so that it is also rewarding for them.
Another change that you could make in reference to monster sets would to change the shoulders to a cape/scarf item this will insure that all players have access to 2 5 piece sets and 1 monster set players will love you for that. Why change the shoulder item because making a 2 handed item worth 2 items would devalue your maelstrom and masters pieces a low defense cape (low like as in belt low) also gives more flexibility in chosing pieces for undaunted perks. should also probably make the capes/scarves hidable players would also enjoy that option.