I don't like the idea of raise saving you gear repairs any more than I like the idea of it saving you sp. It makes the team and the mages pay for what was likely your mistake unless you're a tank. When dealing with public events like SP grinding, we already had too many people asking for raises from the mages when raising didn't help them be anything but too lazy to walk from the crystal to camp. Now there will be even more incentive to stay down and tax the mages for a raise, without adding any real legitimate reason...
You're staying down for 3 minutes instead of using the weakness downtime to walk back to camp, because you want to save a half an iron ingot?
I'm going to ask archers that die because they're using too many personal buffs and meleers that stand in the path of breath attacks walk back to camp still unless the sp penalty really hurts them. IMO gear damage isn't even a penalty. It'll just give people an excuse to get a raise so they don't have to walk and they can thus AFK while they're weak instead of walking.
So really it's not a death penalty. You're giving people that die an incentive to choose the less team-oriented option, which is a free 3 minute AFK so they don't have to walk as opposed to not taxing their mages and walking back to camp. I have better things to cast than raise for better reasons to cast than saving people nuggets and a 2 minute walk.
Again, the major flaw in gear damage for death is that it gives people an excuse to stay down and insist raise. not primarily to save gear durability, but to get a free AFK excuse slip.
Walking is a better death penalty than gear durability. Send em to the nearest crystal if they die, with raise giving them the option to return to their HP or return to the nearest crystal and higher-tier raises with the ability to perform spot-raises.
Event: Death
Option: Return to HP. Keep every feature of the death penalty as it is.
Option: Raise. Return to HP or return to nearest crystal. You have to walk back to the party once you're raised, but you don't have to walk from Uldah at least.
Option: Raise II. Options of raise I with added option raise on the spot. This is limited to high cast time.
Option: Raise III. Options of raise II with decreased weakened time. This is limited to high cast time and high MP cost.
For run of the generic deaths that make up 90% of the game, for the death prone, for the generic sp grinding death there is returning to crystal and walking. A fair penalty for preventable deaths. We all know those people who will sit there and delay the time when they are back to fighting condition just because they don't want to walk back to camp. Don't give them any excuse not to get to hiking already.
For deaths where you're really trapped and the crystal is dificult, there's raise II.
For deaths where your tank goes down and you need them up, there's raise III but it's going to eat your mana and take forever.
TL

R version: walk of shame should be the death penalty in most cases.