I can totally see a system like that, but while being a mercenary you won't have access to the capital cities and you will be unfriendly with all factions :)
You can have an island of some sort or small camps/outposts around the world where you can rest and use some needed NPCs, but that's all. There must be restrictions or everyone will go mercenary mode and won't do anything else.
Maybe you won't be able to go in raids and dungeons while you are in that mode, or a workaround would be to party up with other mercenaries.
It's interesting for sure, and it can go well with the Bounty system that we think of implementing.
The first example that I can think of is: You kill 500 players in mercenary mode, and a Bounty is published for your head with X amount of gold reward. People get the job and hunt for you.