The problem isn't the lack of an animation. I use a macro that shows my remaining HP and a sound effect to show I've used Living Dead with the name of the skill. That's pretty much enough notification, especially if spammed at 1HP.
The problem is that the skill has a long CD meant for 8~ seconds of invulnerability. However most situations with Living Dead either go one of three ways. Living Dead -> 1 HP ->Walking Dead -> Benediction/ Healer CD -> Only 1.5 seconds of Walking dead invulnerability. Or Living Dead -> 1 HP -> Walking Dead -> 10 seconds later -> die. Or my favorite one ->Living Dead -> HP Drops -> Benediction/healer CD/healer continues healing -> You never get walking dead.
The way Living Dead works in general is just bad. It requires more thought from the healer than any other Invulnerability cool down. If the coordination and thought between your healer and you aren't strong the CD can be completely wasted and most of the time it is completely wasted, only being useful for things like Holy Bladedance(sword oath) where there's almost no chance for you to not die(and i've seen a healer still manage to kill a DRK during Sword mode HB)
It's a bad skill, It has the potential to be a really good skill but that potential is hardly ever going to be seen in a realistic situation that doesn't involve a static group.
Making a bigger animation won't change anything. And honestly the animation is already really big , fire comes down from the sky and envelops you. It has more of a visual representation than hallowed ground or Holmgang honestly.