I think better performance getting you more xp/gold would be a good system. Then it would justify people being able to use heavier armor, horses, and better weapons. Just like real mercenaries, the better mercs get paid more money. The richest people in the game should be the people doing the best, not the people running around in cloth and wielding rocks. That's just the complete opposite of RL. The knights were the richest people, that's why they were able to afford such expensive items. They also had a big advantage on the battlefield due to that better gear. Trying to balance this out, seems like it would be pretty difficult though.
I would prefer a better xp/gold reward system, but would be very hard to implement properly (the best players, wearing better armor/weapons than everyone else would just make them even better than they already are then everyone else).
Also, not to detract from the OP, double xp permanently (or at least for people who are under gen 5, and/or under level 33), seems like it would be a good idea.