I dont think a death penalty is the way to engage people. What would be good is to have the option of having a more complex battle system.
I say option because like in ffxi you could win a fight by just standing and hacking a mob or you could make it a bit more complex by gear swapping but making it much faster. So hardcore players will invest time in making proper gear sets and be more proficient whereas casuals would not bother but still be able to do the same things but just slower.