Loss of items at death will only result in MORE griefing. We already have enough griefers on 2k2(Porky, Brad, Eric...etc. No offense
).
Pkers should not gain anything from killing, also I don't think peaceful should be disabled, BUT if a player in peace mode uses his/her weapon on another player then it should shut off.
Peace mode needs a timer so you can't turn it back on when someone is killing you. It should be just like unstick me, and if you are hit then it's timer restarts. It should take like 30 seconds of standing still to turn it back on.