Look about death penalties i think we're fine, if all of u remember there were a worst death penalty applied a few months ago, where after 3 deaths you needed to repair all your stuff and everyone complained about that i cant even imagine how many threads about how harsh the death punishing is if they cut off exp everytime you die.

The main issue is making the game more fearful so in my humble oppinion i would recommend only to make mobs harder and last longer, take away lots of teleport nodes so the trip to get back after death to your party or spot is enough to make you be more careful, or if they leave the nodes make harder the trip with lots of mobs in your way.

If they want hamlet defense to be epic like having tons of mobs attacking and you zerging everything, well treat those mobs separately than the rest of the normal mobs, like instanced mobs.