100%
Fake walls are a farcical mechanic. It spams ED and locks up terts for no mechanically or thematically justifiable reason.
Ched would probably point out it's hard to fix because he can't force factions to fight eachother. But if TT walls did not provide ED and the walls could be assailed by multiple parties (one unified wall), where the 'sides' could choose which faction they can attribute their ownership points to, it would be possible to break fake walling.
As to the big alliance issue, it's a rediculously pervasive issue. Almost any mechanical change to add competitiveness is solvable by alliances brokering deals. This actually occurs IRL (see: Security Communities) and is hard to break without damaging trust between partners.
Constraints around movement is a good idea, the only issue is that it limits just map movement. Alliances can still take hostile actions as a group, in other domains of activity. Especially if the field was opened to more contrarian mechsnics.
What Torn needs is to find ways of setting faction objectives so that they cannot communally profit at large scale. Making territories necessary and difficult or impossible to share would really cut into that. As would disrupting RW copperation, and adding scope for individuals to pursue vendettas.