I am in favor of faction capped open world PvP, provided that it is not simply designed to feel like a large scale battleground.
A good example of what I mean by this was Sony's MMOFSP, Planetside. Each continent/planet had a population limit of 133 players per faction, but there were a number of continents where a player could choose to fight.
That said, each continent itself was quite large, with multiple objectives. Objectives were structured in a lattice, such that you could only capture objectives which bordered/linked-to one that you already controlled. This would create a front line of battle to focus combat. At the same time, however, there were several lattice links active at any given point to allow for tactical play for those that did not want to simply join a "zerg".
Further tactics were introduced through associating desireable bonuses with different types of objectives, the ability to sabotage objectives behind the lines (which would block bonuses, but would not capture the territory), etc...
I think that this type of system would lend itself extremely well to a star wars game, though it would admittedly be a very significant undertaking.