Currently, the LE chip exists to protect tradeskillers and levellers against big bads. It has the money malus, and the XP malus, but it's still possible to get things like WoC with an LE in. This feels a bit wrong.
I'm looking for realistic ideas to encourage players to pull their LEs out.
My first suggestion is that the Malus begins at level 40, and pretty much cripples a character by 55. By this point, they should be strong enough to defend against PKs, or run away at least. It gives them a boost on the levelling at lower levels, so they can get into the game quicker.
Now, for the record, I AM a recovering Carebear. It's only in the last couple of months I've joined a clan. However, I'm now having significantly more fun. You have better protection, it's easier to arrange farming/fighting, you can pool resources to get stuff you simply can't get on your own without a significant output of effort. IMHO this far outweighs the possibility of getting PKed, or losing a weapon, as most of the time, if you drop something important - the clan can just get you a new one anyway, so the only real negative is a couple of minutes getting a poke, and getting back on your way. Let's face it - that's nothing compared to the benefits.