With what you propose, people will have a balanced game until they hit level 40, at which piont every few steps some tweaked out god will appear in their game and kill them. Trust me, for the average person just wanting to play the game, this only has to happen a few times before they unplug. Maybe even once. You can't just "not go human" to avoid invasions this time. This is the choice From made, so the restrictions are required.
In your scenario everyone over 40 would be unplugged or pvpers.
Yup, DSII online will live and die by how well From can balance the invasion aspect, now that hollowing doesn't block invasion.
One encouraging part of it is that invaders are auto-indicted, and as their sin rises, they are more likely to get invaded. People who're just into PvE and also hollow will be ranked as very low priority, so they won't be invaded as often. Finally, there's the amazing starting item that makes your world's monsters hostile to invaders too, nasty surprise there. Just hope it's not a one-use item lol.