Well its not so much that ID's being oorp couldnt work, its that most players, especially pretty much all newer players, didnt and still don't understand how it was supposed to work. I honestly have been challenged about my IFF/ID combination almost every time I pirated someone over the last month. Rather than it being a good RP experience I often found myself just leaving shaking my head because it turned into a // fest of 'fix your ID' or 'you're using the wrong ID' or 'you can't do that you're a freelancer'. I found myself explaining the rules as much as rp'ing the experience. Its not just during attacks either. Ships see non matching IFFs and ID's and don't get the aim, and treat you as if you're breaking server rules. They don't realize that the combos are OK and that you can't really pull off oorp combos like (example, Lib rogue ID with LPI IFF, can't happen anyways).
So as I was sayin, make them inrp or remove them from sight so people wouldnt freak out over not understanding a combination or the rp intent behind it. Removing them causes even more problems though. I hate to say it but people just can't handle ID's being oorp, well new players, which seem to make up a large majority of players now. Its a complex system for newbs and they end up taking ID's at face value anyways. Now instead of explaining the rules we can get on with rp.
Each way has its potential advantages and drawbacks, I support trying it this way for a while at the very least. Like aerlem said, they may clean things up again, probably if this causes more trouble than its worth.