The best way to balance PvP & PvM mechanics AT THE SAME TIME is to do one without affecting the other. Whether that is through player-effect only or mob-effect only or whatever...
PvP & PvM are radically disjointed worlds. Mobs don't have the same attributes/stats as players, and players will develop their character in different ways based on which they like to do. Players will also deal differently with mobs than with other players.
To mix the two worlds is to continuously wreck unpredictable havoc on either aspect of the game.