Well laez, the fast answer to your question is that we don't have enough players to split any faction. It's just not feasible.
As for this other stuff....
Considering both organizations work for Taslamar and the royal family, yeah. It's never made a ton of sense to me that they are separate political entities. If they are ever at odds it seems pretty exceptional to me, and something that is made a big deal of.
I think there is some deal where the Hammer can at times get "too zealous" or the Keepers get "too dogmatic" or something and the Keepers get pissed at the Hammer for killing people too much in the streets and delivering Hammer-brand justice and whatnot. But IMO that is... meh, not so common as to separate them fully.
I think a good, soft solution would just be to give Hammer law immunity in Taslamar. As someone who plays Hammer often I can't even begin to list the number of players who auto-surrender themselves for defending the city, just so they can defend it later. This would not make the Hammer OP because you don't give them law NPCs or buffs... it just makes life easier and more sensible.
If there is some issue of justice involved, then obviously Hammer leaders can speak to Peacekeeper leaders and figure things out, tarnish people or whatever. Maybe give the Peacekeepers the ability to outlaw Hammer at any time, even with no crime... since I can still see certain leaders maybe saying "F U" to the Peacekeepers at times.
Of course this would involve some code changes so I am probably just wasting my time saying this
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