I think this thread is dramatically underestimating the instant increase in player skill when something is on the line. People always up there game when they will lose something for failing. The number of deaths on a permadeath server would be far lower than anyone would anticipate. The only thing that would change that is open world PvP. There would be plenty of crafters and gatherers because it would be something you can do that doesn't put your life at risk. The economy would flourish because things would have real value. No one would level to 50 in level 10 armour. Players would be more conservative about who they party with and proven skill would be significantly more important. Strategy would become far more important because no one would try to do something as dumb as Train their way through Natalan.

I honestly think players would find this kind of server to be significantly more fun than a standard nothing you do matters server. There is only one stipulation I would make As I said before, if you die you are not deleted. You are moved to a regular server.