Nix the FF restrictions completely... but make it so the lowest-level weapons (most specifically, the government-issued plasma cannon) do not damage ships of the same faction.

It makes sense when you think about it... the government is handing out weapons for the defence of its pilots, so shouldn't anyone carrying an IFF of that faction also be carrying a shield modulator or armor plating designed specifically to withstand weapons fire from these cannons? (or the more lucrative reality... that the government issued plascannons are designed specifically to not damage ships of that gov).

This would prevent the problem of newbies going out and shooting everything right off the bat and getting KOS'd by their own nation.

As for protecting them... I imagine the new faction system will do that.