I was actually thinking of setting something up like this. Just you beat me to it. On several other war servers, I built the "neutral" city where people, no matter what race, faction, or class, were able to stay and live without conflict. Only rule was don't cause problems and you're good.
Just one thing: I really don't want to join any formal organization like the Brotherhood until I have actually played the server, but the way you make it sound kind of tips the town off as a Brotherhood-owned city, which is a real turn off. Again, it's like the Templars where they control land, cities, etc...