It's a lot of reading to sort this through but how about something like this:
You can put a bounty on someone's head which will cost a percentage of the player's level. This will make for cheaper bounties on lower leveled players, but will also discourage big hitters from hunting them down. (No point in travelling 8 hours to make 50 bucks).
The jail time should be decided by the town that pays out the bounty. Make everyday more expensive: EG> Day1: 200; day 2: 300; day 3 400....gets expensive fairly quickly, you could work out different numbers if you want.
As to jailbreaking options:
1) The person in jail can pay their way out, either alone or with the help of their town
2) The person can try to break out of jail like a job (Difficulty would equal something like the town's Bank level times 30)
3) The person in jail can be broken out by a dueler or a town who incapacitates everyone in the town. (I think this would be very difficult....maybe you only need to beat everyone who is awake in a duel within X hours, based on the number of people in the town. 10 member town, you have 5 hours....or something like that. Again, exlcluding anyone who is asleep.)
Collecting of bounties: Town members of the town who post the bounty should not be able to collect a bounty reward (maybe they should still be allowed to capture people though).