Warband style MP combat is of all genres also the type of game that can be ruined the easiest by bad network and lag. Just look at player collisions in Warband and how a single bad lag compensation can pretty much kill you outright.
They already have continent specific servers and instance the PvP zones in MMO's anyhow, so I don't see your point. Yes lag affects Warband, but it also affects MMO PvP and wouldn't be handled any differently than they are already doing for a game like Planetside 2 for instance.