The idea was to encourage more players flagging for pvp by adding the jewelry sets to pvp rewards, however that may have be.
They have tried different things to encourage more players to pvp that really have not worked that well (like mouf mud, 0 decay, etc) but the issue isn't that simple. There are a number of things that, together, keep the number down. (these all are interconnected for the most part as well)
One is time. A % of folks just don't have the time to do pvp and pve because they are time restricted. And this is not just time to fight but the time to get the creds to get the gear to get the food to get the other addons then to learn how (git goud) oh and then relearn when changes happen. You will see people saying well it only takes a few hours to level/respec or it only takes a few days to get the creds for good gear. But that is subjective to them. If you only have a few hours a day or week it takes much longer and ignores the pve end AND leaves out stuff such a travel times, waiting to get buffed, waiting for everyone to get it together to start, etc.
Two is gear. This ties into above. Unless you want to be cannon fodder and learn by repeatedly dying over and over you at least need top end gear. Armor, weapons, psg, food, drink, clothes, seas, jewelry, pups, etc etc. Like above for some they can get this quickly but others don't have that kind of time to commit to it unless they only did pvp. Not to mention the costs. You will see peoploe scoff at this and say it easy quick and easy but that is only true for some. Others not so much.
Three is culture. I want to start this by saying the pvp crowd here is one of the least toxic, most helpful I have seen on swg servers and over time they went from cesspit to today. With that said there are a % of people that just don't like the competitive aspect of pvp, don't like the mine is better than yours, don't like the good natured ribbing, and really don't like the trolling and mockery that sometimes go on. So other than hope that changes this % of folks just won't no matter what AND remember this is a very decent pvp crowd here.
One solution would be to make some kind of instance or place where people load in and select the gear that is appropriate for that faction etc but it is all the same for each side so it is pure pvp not who has the best gear. It also eliminates the time issue and more You keep pvp the way it is outside this place so that stays the same. As for GCW I don't need to pvp to get tokens and don't. For me personally I pvp with my smuggler doing pvp quests and it adds a little spice to know I might be hunted and to have to fight or run away (I am about 50/50 win lose on this). But I could wake up dead tomorrow and I no longer have the patience to stand absurd people who, despite their chronological age, have not grown up.
There is no easy solution here and certainly not one that will make a lot of folks happy. I would pvp with my guildmates if it was just us going against us because I know them and it would all be good natured teasing and bragging and the group would squelch any trolling and such. That does not happen outisde that context however.
And these are just a few things that make it so hard to grow the pvp end. Kudo's to you for at least trying and kudos to those that keep it going for being a, with a few exceptions here and there, a decent crowd of pvp people. (people experience pvp in other places that can be just awful and it makes one reluctant to try again)