A couple big reasons RPers don't last here:
Difficulty: This is the underlying problem, and is directly related to my subpoints here. Roleplayers, by their nature and for the most part, are not powergamers or PvP professionals. There are certainly some exceptions, but for the most part we don't roll 15 7x characters, farm religiously, run 3 afk fishers 24/7. We make our main characters and maybe some support characters, but nothing to the extent that a powergamer does. The grind on IPY in terms of skill gain is still just too hard. I have 2 characters on IPY. One is my main, Veis Driance, who is 7x. The other is a mage with skills in the 80's. When the server started, it was great fun to build up your character, rush for house spots, stake your claims, etc. Now that that shine is gone, I am just not willing to put in the time to build up another character. I'm sure there is a similar mindset here. Roleplay consistently pops up on shards like hybrid, or other places where skill gain is easy. The reason is a roleplayer can make a viable player in a day, then get into what they came to do originally, which is roleplay. I appreciate and understand the philosophy you have for your shard Az pertaining to skill gain. Unfortunately I don't think the result is what you were hoping for.
Red penalties. A strong orc presence is the cornerstone of all the RP communities I have played in from Catskills to IPY 2.0 and most of our RP has been shaped around interaction with orc clans. The areas around the orc fort is a good start. I would make those count free, pally free zones. People who go in are still blue, but cannot give counts and any pallys who kill there would not have any adverse effect on their victims. I would personally like to see penalties on reds lessened and have groups of orcs wandering the map and raiding dungeons at will, but I think the above suggestion would be a fair compromise. The problem like I said is all rooted in the tough skill gain. Orcs like to RP and PvP, they aren't powergamers and don't have the time or resources needed to bring a character back up from stat-loss.
Content: Theres a lot of good things here on IPY, its mostly focused on PvP, as a long-time PvPer I support this mindset wholeheartedly. I won't get off topic here and go into OCB or other changes to the PvP mechs as that is a different can of worms all together. Like I said above, a lot of RPers aren't here to PvP, or at least to the extent that those who play solely to PvP are. For the latter, the PvE and dungeon crawling, crafting and other forms of play are done almost exclusively to fuel their PvP characters. For roleplayers however, a big part of their gaming experience is outside of the realm of PvP. A lot of my guild mates don't particularly enjoy getting slaughtered in OCB by people who are far and beyond what they can ever hope to or care to achieve in terms of PvP skill. I personally enjoy going up against the PvP mages out there, but believe it or not some of the most fun I've had in UO is large scale dexxer battles. The main point I'm driving at here is that RPers, and the shard as a whole needs more content. We need champ spawns, more dungeons, more overland spawn. If you make a champ spawn with a very small chance to drop a rare, you will instantly stir up the shard. Tamers will be out, people will step on each others toes trying to farm the area, reds will come in, etc, etc.
Thats it for me for now I'll probably add to this later