I understand where your coming from. However, the penalties does not give a sense of danger it only makes you dread the hassle. The majority of death penalties are hassles and most dread the hassle.
Now picture this. The only direct death penalty is reverting to the last crystal. However, for the folks that actively stay alive are rewarded with boons/bonuses. I used actively in the sense that the gamer must be engaging and surviving battles over a specified time. These bonuses are also time based so in order to maintain it you must actively stay alive (actively engage in battle and survive). Now that the gamer who is actively staying alive has something that is precious (the boons/bonuses) and he or she would try their best to maintain these benefits by staying alive. If you die, you lose your bonus and you will have to rebuild the requirements to gain the boons lost.
That too me is a better solution than the current methods of death penalty.
"If you see a Rank 99 Goblin Headman, you can rush headlong into battle and if you get killed? It doesn't matter. You just "Return" and are slightly Weakened for 3 minutes. See a Rank 79 Inferno Drake (that looks quite dangerous)? You can just rush right up to it, try to kill it, or laugh as you get destroyed by its Weaponskill in 1 hit. The only penalty is a Weakened State for 3 minutes."
With regards to this, the penalty is death. If a gamer wants to engage an enemy that is obviously stronger he or she should without worrying about additional penalties beyond death. It also encourages the gamer to take risk and the consequences would be death. In this game it could be more than just three minutes even if the weakness was removed because there are many locations that are more than a three minute run. I don't know about you but I do not fancy exploring the far extents of the map to die and be sent all the way back to where I started. That is not trivial to me but rather significant.