RP via IM chat is very good for back and forth conversations (more than just the 'question/answer/awesome intro and tavern entrance theme/will buy or sell/follow other player' of PbP) and people that want their characters to be engaged in dynamic realism, with all the awkwardness that it entails. However, it's easy to lose out on the sweeping narration without some dead centered persistance on the part of the GM.
However, not all RP need be done in chat - if two people come online on the same channel, for example, then it's perfectly fine for something that's spontaneous and by the moment. If the characters aren't supposed to meet each other, the GM can divide them between channels. Players might also be aware that hanging around in the channel might provoke the GM to put a random encounter on their character ("Oh, you said you were in the streets? Okay, an urchin attacks you." "Seriously? I could one shot him. And aren't their guards everywhere?" "No, actually, you notice that he just made off with your magic boots. Also, the guards don't care. You hear them complaining of bad hips." "WTF, I am so catching him."), because there's 'not much else to do' (among other GM excuses to discourage players from non-optimal usage of his time). xD
PbP is the perfect place to co-ordinate schedules as well as plan meetings for IM. If a game features IM combat, it's perfectly fine to put down GM's preferred player timezones - something that's easy to forget, considering the sheer friggin' scope of the internet (even though myth-weaver's population is only 80,000 - god knows how divided that is among nationality).
IRC is pretty easy to get. MIRC has an 80 day trial but it's sort of possible to go beyond the trial period (it just spams you with registration alerts, from what I recall), and some googling could probably get you a freeware, such as IceChat (if I still have that program).
I was thinking how a map would be tedious to do, but very helpful. Then thought - you might put grid coordinates next to each location so people could have a quick idea of where they are. Comparative to other locations. There are some cities where the streets are numbered - like Main running East to West through the middle of town, then North 1st, North 2nd, and so on. Cross Streets could be "Cross" running North to South in the middle of the city (intersects in the middle of Main) and then West 1st, West 2nd, and so on. And so Blacksmith could simply have a N8W8 in front or behind it. Large locations could be N1-3W4-6. Or something to that effect. Just a thought. Feel free to ignore or use in some completely different format.
Take a city map and label each location. The first step is already done if the OP pointed out every location he wants to cover.
A co-ordinated code would complicate things, since it entails a very big map and forces players to constantly referance a location that has more than just a name. Think of navigating in an RPG video game like skyrim.
Just entitle each location. If your covering streets, you can give each street a unique name (preferrably ending in St. or 'of X landmark' so 'Yellow Cobble of Pewter Cemetary', because off to the side of the road is an inner-city cemetary with pewter grave stones, or 'Yellow Cobble St.'). Streets are as far as I'd go regarding codes.
Unlabeled locations would be wilderness - down trodden areas that the guards don't patrol as often, and you may only start up a productive conversation with an NPC if you're really lucky (or have that reputation and the player, themselves, are really good with words). That sorta thing. Because it's a city, it's easy to alert the guards. Guard response times and accessing guards depends on how much law enforcement there is and how much it cares, regarding where you are and your character's status. Yadda, yadda, yadda...
Finally, each location could have a movement grid, for the purpose of running any combat encounters and providing players the exact lay out of the location. If a location has no movement grid, then the GM simply has to wing it - which is something I've done before and the players never argued against - however, it also eliminates the concept of tactics until the players start running into blind danger and the GM has to let the players survive so that they can adjust and navigate via memory, ie. 'moving to X location is dangerous'.
Creating a movement grid for every place might be the most work intensive part of this idea the OP has going. There doesn't need to be any 'you are here' though, and running combat doesn't mean the GM needs to update each grid for each player's movement during IM chat either - because the time that takes will slow things down considerably, unless the players somehow have control over their own tokens; which I wouldn't recommend running for logistical reasons (everyone needs maptool for one, it's easier to mess up the map than it would be if the map were on an actual table in real life, etc.).
Have I outlined everything for yah?
Oh yeah, for movement:
Start with small locations, such as the black smith and then move out to progressively larger - barracks, then guild house and keep (probably about the same size), then something really large like the sewer. If the adventures are kicking off already, just try to keep the players where you want them or have them stumble into wilderness if they're feeling explore happy (have NPCs approach them and tell them what kind of supplies they'd need for such a venture, etc.).