YES this is an EXCELLENT concept! ( i remember how amazingly fun it was in SWG to have player-made cities )I would like to see an event where factions need to build a city - that means crafting skills - along with getting resources from well guarded places.
So the Mine, Lumber Mills and farm produce resources, need to be cultivated and defended.
As a non developer - I have no idea how long this would take to do.