I have had some time to think about this and the impacts it may have. I think that it does have the potential to deal positively with some of the issues inherent to past raiding, the main problem of which seemed to be the ability to bleed an organization dry via guard kills because the xp loss was completely negligible.
The hard part, I think, will be balancing it in a fair way. There does have to be a hit to the city in case the defense is lost, which is understandable, but there also has to be a hit to the raiders on a failure. Without including this, there's no reason not to raid as there is no real risk to be had.
XP: I would argue that if the previous limit was 1.25% then 1% is still too low on the xp route. For most of the players who enjoy raiding, this is a drop in the bucket. (Unless I’m missing something here).
No XP loss while defending your city makes sense, as what you should face losing is the objective.
Shardfalls should remain no XP loss. These are a great intro to mechanics for new players, and have historically been fun scrap-fests for most people involved. It would be a shame to see less participation in them.
City loss: 25% increase in cost/upkeep seems on the steep side if that's the ballpark for city penalty on most of the objectives. As I've mentioned previous, city leadership is not super fun. I think this penalty could be kept if there were some positive changes made to the way Trade/Security are handled - would a new thread be best for that?
Guards: I really like the idea of guards automatically arriving at enemies at a predetermined rate in housing, and this change would be even better if it also affected guildhalls.
One of the prime reasons that guildhalls see less use is because they present a security risk. Having some sort of security to them would go a long way towards making them worthwhile hubs of RP once again.
Other penalties: Rubble sounds awful to be honest. I would rather take a financial hit that trudge around my council every day. It would be incentive for people not to visit the council at all, and just sounds endlessly frustrating for new players trying to accomplish anything.