It would be a pirate ship simulator/FPS combat MMO with very little RPG elements. This would be a very complicated game to develop.
The setting would be the Carribean cca. 1700, with a lot of islands and a few pirate safezone islands. Ships in this game would be the guilds. The players would be the crew. To obtain money, the Ship(guild) would have to organise attacks on enemy merchant ships (British, Spanish etc.) This would be the game's equivalent of raids. If enough ships(guilds) could be organised, they could together take on a fort and capture an island from the colonial powers.
The Captain(guild master) would control the ship like in games such as Sea Dogs, Age Of Pirates and so on. The ship itself would not have special abilities like in MMOs, instead, the crew would have to operate the canons, and hitting the enemy ship would require skill on their part. The captain would be able to yell "Fire", but it would be up to the crew to follow orders - (maybe even add a little attack bonus if the crew fires when the captain commands)
Maybe make it possible for every player to have a number of companions, so they can do the stuff the human players would find boring (like cleaning the deck, cooking, carring gunpowder etc.) So a guild would consist of, say, 20 players and each of those players would have 5 companions - so that's around 120 people on a boat. These companions would do stuff automatically even if you're offline, kinda like companions in The Old Republic.
Boarding would also be a big part of the game. The combat would be primarily first person(this is just my personal preferance, third person is also fine I guess) and would be like Chivalry and/or Skyrim but with muskets. A volley of musket fire would have similar mechanics as the cannon combat. When the captain yells "Fire", the player would have to shoot in a small timeframe to get that damage bonus. As the captain levels up, this time frame would increase.
I mention earlier that there would be no abilities for ships in the traditional sense. Ships wouldn't be able to "level up". A much greater emphasis would be placed on upgrading your ship and ship classes. This is exactly like Mech Warrior, where you have Light, Medium, Heavy and Assault mechs and each one has a specific role to fulfil and a set of pros and cons. Similar in this MMO pirate game, Bigger ships would be very powerfull, but would require a huge crew to maintain.
If you've played MechWarrior online, then you know that there are no +5 Lazers in it. Every medium laser is the same. Same with this game, there would be no +10 frost damage cannons, only different sized ones.
Now the real challenge in developing this game would be to streamline the process for the new players and to make it easy for captains(guildmasters) to manage the whole thing. I don't want this to be another EVE online.
So, a lot of Raids and PVP. The game would be made so that you could play with 3 friend and still have a good time - small ships like Sloops, Tartanes or Luggers. But the best part would be huge 2 vs 2 battles with something up to 128 people involved.
Respans would work like this: Remember those companions I mentioned? The would count into the total number of crew the ship has. This total number would effectively represent the number of lives the guild(ship) has. (Kinda like Heroes and Generals, the free MMOFPS/Strategy) Maybe add surgeons(medics) in the mix that can "revive" dead players.
All of these actions would be acompanied with very nice first person animations like the ones from Far Cry 2 and 3. Realism isn't the goal here, merely an illusion of it. And since I have an unlimited budged, I would hire a bunch of animators to release new animations with every patch so that they don't become boring.
Also, hats. Lots of 'em.
Do I get Blood Dragon now?