Sure! Sounds pretty fun, except for one small thing that I don't really know how it could be fixed: One group would become superior, and make it difficult for new players to start. Otherwise, 10/10!
~ @Qaztar
This is a concern, but I think can be remedied by including a fairly large map size. One group 5000+ blocks away from you is quite far, and you may not even find out there is a group there, let alone the biggest/most powerful.
I don't see how this gamemode could be considered fun. The way I see it, it would be more rage inducing then anything else. Builders can't build because of the free griefing, you honestly can't build a house unless you have someone online 24/7 to defend it. All the bases would be underground, nothing would be safe. What is fun to me about survival in single player is that you can do whatever you want, and you can be 100% safe with all your items. This has about 0 safety for anybody, and you will often see people raging.
I don't see how anyone considers this factions or can even relate it to it. With this idea, there would be no raiding. Want to raid this base? Why do that when you can just mine into it. There is no way anything could be fun for me when all you do is just free for anyone to screw up.
~ @smk
Yes, this is not intended to be a easy farm mode like towny, or skyblock. This game will be hard, and you'll be playing with a challenge every moment, and you may very well lose all your things multiple times if you're not careful. The challenge in this game-mode is the draw, in my personal opinion. You have to earn what you have, then keep it safe, a daunting task.