I agree there needs to be some kind of middle ground, but in order for that to happen people need to rp properly. Most of the motives for conflicts I've seen have just been escalated ooc.
1) There needs to be a form where people rp properly, and don't just beef for no reason, or escalate out of proportion. Made guys walking out on a bill ≠ Target mugging and tagging. This would be a verbal dispute, which in most cases should end in a big grumble where the made guys cough up the money. AND THEN THE SITUATION ISNT BROUGHT UP AGAIN UNLESS A SIMILAR ISSUE IS REPEATED.(Problem here on both ends in this server. 1. the restaurant owners instead of pressing and starting a confrontation, let them walk out and harbor the interaction for later escalation instead of handling it in rp. 2. If party 1 interacts, The made guys initially in the wrong don't correct their actions by coughing up the money. Instead just walk off and ignore the interaction.) This is just one example, but could be applied to many others.
-Implementing easier escalation promotes overlooking small rp and just escalating when not needed.
2) Metagaming is sadly something that needs to be considered. UAs place in escalation is for a reason, as people do just overreact, using a mix of the first problem as well as metagaming. Ex. Someone says something questionable, that under normal circumstances you would just correct and have a quick apology. BUT the person who made the comment has had interactions either ooc or on a different character with the person who was the subject of the offense. This makes the whole interaction even more escalated and out of proportions.
-This is also something that is taken on whole faction levels. Prior leadership leaving the faction in poor standing, and instead of people larping and jumping at the fact to make a district or gain political power over another faction keep stomping the faction down due to prior interaction. (This can also be flipped, and factions who are in a very vulnerable position refuse help and rp just to stroke their own cocks. I won't name names.)
3) While letting admins handle it would create more flexibility, it would also just produce a lot more tickets which inevitably UA would need to handle. And then it would be even more frustrating if UA decided that the escalation wasn't just and the whole situation needed to be voided. Similar to PKs, admins make mistakes and thankfully that's easy as unpking. Voiding whole rp situations is way more difficult because those feelings don't just go away.
-I do think however, UA needs to be a bit more lax on some of the escalations. If someone refuses a sitdown, the sitdown shouldn't be questioned. IRL if you were asked to a sitdown, even if the reason was shit you still went. And not showing up was a big deal, even if the reason was dumb.
TLDR(foid babble summary)
1) Larp currently isn't proper enough for this to be implemented at the level you suggest.
2) Metagaming is a huge problem in this. (Big feelings ooc are hard to handle, but they should not be brought IC)
3) Finding a way for staff to handle this smoothly would be hell.
It's a huge +1 from me, but seeing how UA would would make it all work would be very interesting. Feel free to reply to some concerns, I tried to put effort and attention into it but I'm at work, so I may have misspoke on some points.