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So yeah, I don't really see how this would work in Ashes and not be the main route to absolute spawncamping by pretty much any group that just wants to have "some fun".
Alternatively perma-flaggers would just operate in their own node, which would mean that general travel times are under 2 minutes (from any point in the node to its center, on a mount), which is pretty much the same as the current timer.
So, say, in a situation where you were pvping deep in a dungeon and you win. Your opponent would rez somewhere outside the dungeon (assumedly). If dungeons are as big as was promised, it would probably take him about 30s-1m to get back to your location (if there's a way to completely avoid all mobs along the way and also no one else aggros onto the flagged person). So in this scenario both of you would be still flagged.
If the opponent now wanted to come to that location unflagged (especially if he doesn't want to risk anyone else killing him), he'd wait to unflag outside the dungeon and then run inside. Assuming that flag doesn't drop on death, that'd be 2min at minimum.
From a reference here, it takes under 2 minutes to mount from from end of a metro to another.
https://ashesofcreation.wiki/Faster_travel
Which means that it takes even less to mount from other points in the node to the center. So if the opponent wanted to remove the toggle and then come back, it'd take him ~2.5-3m to come back to your location unflagged (again, assuming no one kills him on his way to the node center).
The xp loss (let alone other penalties) of operating as a perma-flagged person outside your own node (or a military one, as you suggested) would HIGHLY outweigh any 5-10% bonus to xp gain, which would decrease the amount of people who do decide to do this to absolutely miniscule amounts (again, outside of big groups that do this on purpose).
So, having said all that, would you be fine if the pvp flag stayed on the person for 3m instead of 1.5? Cause I'd be totally fine with that number for those who make the first strike against a green (which would be the "jump" in the context of this thread).