I think this idea of player-controlled monsters is very cool, but it requires the careful handling of PvP concepts inside a PvE experience.
It opens up griefing possibilities; someone who doesn't like you tracks you and switches to a monster when you enter the designated player-monsters area to PK you. Since the death penalty will probably be harsher than in modern MMOs, it could sting. And if you remove death penalty from a player-monster, it could create collusion where a player-monster follows a group of PCs, does not attack, and only kills people about to die from normal monsters to spare them the death penalty. Or the player-monster scouts around for the players, to report where the named monsters are (since they don't aggro). Or attacks a second group of players competing for the same named monster in the dungeon. The drama can really flow with something like this.
The closest mechanic I saw was when I played LotRO, they have a PvP map where players can roll orcs, worgs, etc to compete against normal players to control castles, mines, etc. However it just felt like regular "king of the hill" PvP and not an experience like what you're describing. When monsters are controlled by players, they tend to act totally differently than NPCs yes, but at the same time, it doesn't feel like you're fighting anything else but players anymore.
Your post makes me wonder if Pantheon wants to go in the direction of PvP at all, it is a road fraught with peril for developpers, especially when your game wasn't designed towards PvP from the start (unlike that Camelot reboot for example).
Think we already have a thread regarding this here: https://www.pantheonmmo.com/content/forums/topic/3824/i-once-logged-in-as-a-lizardman-shaman-quot-project-m-quot
Check it out. Lots of good discussion.
Sicario is correct, (thanks Sic!).
Please continue in the other discussion after reading through it all, we have replies from Brad in there too with some thoughts on this. I will go ahead and close this thread now, please use the search function prior to creating a new thread as in most cases you will find that someone has already posted the same idea and discussed sometime within the last 3 years. :)