You need only do two things to fix DHKs:
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Remove dishonorable kills from the game completely. No more deranking from DHKs, intentionally or unintentionally. No more permanent red DHK count on honor sheets.
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Make honor decay an option with a toggle for people who wish to derank to a lower title. Allow one full rank to decay per week with the base being no rank. Players who want the Rank 1 title or to go back to having no rank will be able to obtain it naturally.
Players who don’t care about the PVP honor grind are not being punished by receiving a dishonorable kill. You are mostly punishing other players for being in a group/raid in a social MMORPG who had no intention of killing a “civilian” NPC in the first place and likely didn’t participate in the killing of said NPC, but were merely in the vicinity; you are, however, rewarding those who do it just to grief those players with more work (and potentially months worth of setbacks) as well as a permanent stigma on their character sheet.
If you don’t want certain NPCs to be killed by players, then make those specific NPCs unattackable like children NPCs are. It’s an easy fix. It’s not as if dishonorable kills prevent griefing in the first place; they don’t. The players who kill “civilian” NPCs don’t care about the penalty. On PVP servers, higher level players grief by killing the opposing lower level players themselves, which is part of the game and comes with the choice players make when choosing to play on a PVP server. Some of them camp flight paths for easy kills on “gray” player-characters worth no honor points, just to grief. Griefing happens and is part of the game, but typically occurs with no long-term detriments; DHKs are different by being permanent and caused by our own faction and allies. Remove them.
You’ve shown that you aren’t unwilling to make changes to Classic or add features that were not part of the original game (chronoboon, dual spec, instant mail, revamped PVP ranking system), so you should have no reason to avoid making a change that would please the vast majority of the player base and remove a common form of griefing.
Also, add a barber shop to Stormwind and to Orgrimmar. Thanks.