Now this is some fun PvP even I can get behind!
To expand, this is exactly the sort of thing I like to see and hope we get to see more of.
1) It sets rules. Its a gentleman's war, where the rules insist that everyone involved treats everyone else with some basic level of respect.
2) It clearly paints dick moves as being against the rules. Attacking unarmed mining ships, attacking newbies (which are going to be flying very small ships), and just building giant uber-titans to roll over everyone are all right out.
3) It promotes skill in both building and piloting. The size restrictions means the fights are frequently going to mean whoever has the most optimal build and the best ability to fly their ship are the ones that are going to win. Its not just brute force attacks. Thats the epitome of good PvP in my book.
4) It discourages dishonorable conduct like ambush attacks, and makes it clear to everyone with the skull and crossbones what you are doing.
5) It encourages honorable pirating behavior, such as giving the opponent the option to back out (for a price).
Hell, even *I* would join a pirate faction if it lived by these kinds of rules!