Bending Penetration:
It would take some time, but I think the effort would be worth it. If abilities could penetrate armor at a specific percentage more so than a sword or a bow would, I think it would give people more incentive to bend in pvp combat. Currently, a damaging ability would not deal enough damage to someone wearing armor to be viable in PVP combat.
[NOTE: I’m throwing out numbers that are not real in the following paragraph for the sake of understanding]
A fireblast deals 10 hearts of damage while the player is wearing no armor, and 1 heart of damage while the player is wearing diamond armor. If you could allow that fireblast to penetrate partially through the armor, and deal, say, 5 hearts of damage, it would give people the incentive to still get as good of armor as possible, but also work their bending abilities into combat.
It seems like a good idea on paper, but I think it would take a lot more work than it sounds like it does. When you damage a player with an airswipe, Minecraft can't differentiate that airswipe from the damage of a sword/bow. This would create a complication with swords penetrating armor while they shouldn’t, because the damage type is the same between bending abilities and weapons. (This might be completely false, it is what Mist told me when we were working on adding this to Etriacraft long ago.)
BUT: If you managed to distinguish the damage types between bending abilities, swords, and bows, I think this could be a great balance between vanilla MC PvP and BendingPVP. It might take time, but I truly believe it could revolutionize PvP on PK servers.
The specific percentage of penetration could be manipulated from server to server so each owner can choose how much he wants bending to influence PvP combat, but the PK staff could come up with a good base percentage after testing.