Regular Restarts is absolutely not the answer. If you have regular restarts, everybody is going to quit. Thats the exact OPPOSITE of the point of an MMORPG, which is all about character development and time investment. And if you're talking about a more traditional competative online PvP system, then what do you mean restarts? Are you talking about an RPG with character development? Then again, you don't want to undo people's advancement. Are you talking about a skill based game? Then you CANT erase people's skill. So what?
If you're talking about games like WoW, which regularly releases expansion packs to keep the game interesting, you are misunderstanding the game design involved. Thats not a restart.
The way they balance the game is not with character restarts, but with a "levels" system. Players who have played longer are more powerful, but they are higher level. Higher level players move on to higher level areas, and as such are not near the low level players.
To keep someone who has been playing the game since it came out non-stop from being unstoppable, nearly every successful MMORPG has implemented level caps. So once you hit the highest level, your character cannot gain stats any further. Furthermore characters cannot usually challenge characters who are X levels lower than them, or at least receive a penalty for doing so.
You can't force high level characters to be far away from low level characters, thats just not fair. Players need to have control. However, like I said, if you have proper level design that takes into account character progression, then high level players will have moved on to higher level content, and will naturally be farther away. But this does not prevent them from running back to the low level areas, and gank low level players. And this definitely happens all the time.
If, however, you're not talking about an open-world persistant MMO, then I don't see what your problem is. If you're just talking about a traditional online pvp game, then you're just talking about a matchmaking system.
Record a skill level for each player, and then increase or decrease that skill level after each "game" they play pvp, with increase for a win and decrease for a loss, and the amount being based upon the difference between the players' skill levels. See ELHO.
So you just match up the high level players to fight each other, and the low level players to fight each other. See: Halo, Warcraft3, League of Legends, etc. etc. etc.