I think this is a great idea and would be a hard one to implement. Runescape does house instances, and its cool, but I don't think it is the flavor of Faldon. Faldon seems more public to me, everything is accessible by everyone.
I think maybe in its testing phases, having towns with empty lots of land to purchase would be a great way to do it. Then you could watch a town build from the people, more similar how it would be in the midieval times.
It always could be expanded to limited amounts of raids and damages in later phases, although this might be very hard to do fairly. But this, and adding farming land, etc would be a cool addition.
You could even add more to carpentry with furniture and add more diversity in the Faldon economy.
For house building, you could start out with wooden material (wood shack like structure), Then have to upgrade your house with better materials over time.
I think mining needs to be revamped a bit, or at least the nodes need shorter reset times, but this could structure more economy too.
Pennywise is right, and Faldon is a lot about showing off, its just part of the fun.