I have no opinion on whether Otogakure becomes a village or not...although technically, according to Narutopedia, it isn't really a village. Called a village as a disguise for Oro's labs. Also, note that most Otogakure shinobi originally come from different Lands beyond the Land of Sound (formerly known as Rice Field). Oto has no academy now, so no shinobi of their own. They had in the past, but probably died out when they tried to invade Konoha. The only remaining ones are lab experiments who obey Oro.
Anyways, now that i let that out, my only problem is the PvP "safe haven" thing. I don't believe there should be such thing as a safe zone. You can hide, but you shouldn't be able to completely disappear...(perhaps, unless you are capable of Kamui)