What type of government would it be? Socialist; Communism wouldn't allow capitalizing of 'dropping' items for trade.
Would it be a cool place to live? Hell yeah, give $2.99 and come out with $8,000. No dying, no having to worry about health, changing your phenotype whenever you want.
What if you actually looked like your graal characters (id look better than i do in real life)? I would look SO sexy.
Would you survive long? Yes, we kinda can't die.
Would noobs act the same as they do in era? Nah, people can't be shouting TRADING SHAMR DACGGR for infinite amounts of time unlike iEra.