just keep it simple. all bounties need to be auto-scripted :-
pirates: allowed to kill police and traders. gets bounties for these.
police: allowed to kill pirates & police. gets bounties for these.
traders: allowed to kill pirates. gets bounties for these.
AND THATS IT.
Also -- no rule against relogging into system after death. You can come back and fight again if you want. If they spawn camp, someone else will come help.
FINALLY -- No need for individual factions IDs. All factions are either pirate, police or trader. AND THATS IT.
Simple. You can rp if you like but essentially the above is all there is to ruuning an mmorpg game of that type.