Caita I would just do a little red circle under their feet maybe for less visual intrusion. Enemies have red circle.
The problem with that is if an opponent's feet aren't visible, the circle might also be invisible, and it's still hard to tell apart in a large group (Though still a lot easier than a banner). (Also, I'd put the circle under allies, so enemies can still be sneaky.)
That was why I emphasized optional for my suggestion, as a lot of people would hate it. Unfortunately aside from a full body FF system, everything has flaws; and full body FF systems are an eyesore.
Actually, tying a full body glow to a hotkey in a similar manner to view outfit might work. If you aren't sure of a player's team, just tap the hotkey and check... anyway, something that I think would be nice as an option.