Aion is the one modern MMO I've played that made me almost as paranoid about death as FFXI. Dying meant paying exorbitant amounts of money to a soul healer. There were times I was flat broke between that and the money it cost to level my armorsmithing (they used a work order system similar to crafting leves, but still required you to buy the materials and pay to train at each crafting tier, which became painfully expensive).
But I would still welcome a monetary cost over loss of exp any day.
^ I agree 100%. I think this really gets to the heart of the matter for me.
MMOs all approach death penalties in different ways. Most of the older ones went at it from harsher angles. Exp loss, exp debt, corpse runs, even perma-death. But by today's standards, they're archaic. Times change, and we evolve. I think modern MMOs have taken a better look at risk vs reward. And most games have implemented a death penalty that is appropriate to the style of the game.
For example, some people think that World of Warcraft's death penalty is too lenient. You run back to your corpse in ghost form, resurrect, then go to a repair NPC and pay to fix your durability loss (gear damage). However, the game centers mainly around dungeons and raiding, where it is expected you will die a large number of times learning a boss fight. Especially in the newest expansion, where boss fights and mistakes are extremely unforgiving. Stand in the wrong place longer than 2-3 seconds and you're dead. As in, insta-death. The raid wipes. And you might wipe 15 times that night. An epically geared plate wearing tank is going to shell out upwards of 100 gold on a typical raid night for repairs. The death penalty fits because of the mechanics the game is built around.
I think FFXIV's death penalty is actually very well thought out. Gear should take an extra durability hit (if it's not already) because it's already a focus in the game. Hell, it's one reason I've had an incentive to choose the crafts I did, so that I can do my own repairs. And the weakness debuff and having to run back from the aetheryte is enough to potentially make you fail a leve. You care about your survival and keep from doing silly things, which is all a death penalty is designed to do, no matter how its implemented.
I'm honestly surprised those who played FFXI still think exp loss is a good idea. It may have had its place in FFXI, but it was a harsh punishment that did nothing but incite anger. You want to see someone go into a Jack Nicholson axe-wielding rage, watch someone who's lvl 75 delevel who's supposed to do endgame and now can't until they get their level back. In a game that forced you to spend time looking for a party, traveling out to a camp, and then hope the party didn't fall apart before you actually got some exp. Exp was the most precious commodity in the game, and it was so easy to lose. It made people afraid to take risks or explore or try anything that might get them killed. There was someone in my LS who actually deleveled 6 times just trying to get to Norg. There are beautiful places in Vana'diel I never got to see and always wished I could have. But playing for four years and still only getting to lvl 64 prevented that.
If an exp loss was implemented, we'd go back to the stigma of fear shadowing over us. People would point angry fingers and tanks/healers would be ostracized for making one critical error. We'd all assuredly be failing our leves waiting around for some nice Conjurer to come Raise us. Is that really the direction we want this game to take?
Yoshi-P has stated that alleviating player frustration and putting the fun back in the game is part of FFXIV's new mission statement. There's no reason to implement something that will assuredly incite a knee-jerk angry reaction, and even be a game-breaker for many. It just doesn't fit with the new direction that FFXIV is taking.
tl;dr - I'm fine with death penalties that cost us time or money, but make it appropriate to the style/mechanics of the game. XP is something we should never see taken away from us.