Slippery slope arguments are a bit tricky. After all, since more severe DPs make more skilled players according to you, by that logic having permanent death should make everyone experts, right? But it doesn't, because you need to be able to experiment, develop your skills and find your niche. Even if it did, only a few people would be willing to put up with that, as evidenced by the amount of players who actually used hardcore mode in Diablo II which did exactly that.
Nothing about DP directly impacts the battle as you fight it. No matter what in FFXI, if you wiped the mob would reset back to full hp. In other words, if you died, you failed, and you had to start over again. This is probably something they should change in FFXIV. I am puzzled as to why the mobs in Guildleves in this game don't reset to full when you wipe--they probably should so you can't grind them down as I have on enemies like cactuars with broken one-shot skills. Hopefully, before they do that they change some enemies to not have one-shot skills, or a much longer interrupt window, before that. I've seriously spammed supposed interrupt skills the second I see them start charging and it still hasn't made it out in time cuz of the laggy game engine...but I digress.
No matter what, in any game you want to avoid death. Even in games like Prince of Persia where you never really "died", you still had to have the skills to advance in order to do so. Taking less time with loading screens etc didn't win the game for you, you still needed to do that on your own. Similarly, the threat of having to spend hours doing boring grinding (mind you, in a game I'm paying for in order to have fun, not give myself a second job) if you die has no impact on actual battles other than making you less willing to take risks like getting into tough battles in the first place. You may say that didn't apply to you, but it certainly did apply to a large amount of FFXI players. More occasions than I can count, I remember LS members and friends not helping out or doing something because they didn't have a buffer, and I was no exception. If you're ignoring the risks and taking on tough challenges, the DP has no effect on you anyway, so that doesn't work either. All it is is a timesink and a relic of a bygone age of MMOs where game developers thought death needed very harsh punishments. Timesinks are, to some extent, necessary for MMOs to stretch their content, but players are much more savvy than they were 8 years ago, and most of us won't tolerate such transparent ones anymore, since they are associated with a lack of content. I have tried over the years to get many MMO players into FFXI, but they refused or tried but couldn't enjoy it for the same reason an xp loss DP is bad: grind. Remember, an MMO is not a professional sport, we're not here to whittle people down until we get champions, the game exists to get as many subscribers as possible because it is a business.
Aside from that, there were MANY bad players on FFXI, being patient enough for XP parties didn't make you a great player any more than driving a lot makes you qualified to race professionally. The skill level was about the same as in other MMOs I've played, although FFXI players are necessarily more polite because of the heavy emphasis on groups--but again, that's not a hard and fast rule either, I've met real jerks on FFXI who nevertheless were also the best geared.
The golden age of MMOs came when some developers realized that harsh penalties and naked grind (I'm going to regret that phrasing) aren't necessary to make a fun, challenging game. I'm willing to put in huge amounts of hours to other MMOs because they mix up the leveling process: quest here, dungeon there, pvp somewhere I don't have to deal with it, etc instead of 4-12 hours straight of killing the same damned mobs in an xp party. They also don't punish you with more grind for death, so players are more willing to experiment, which leads to more adventure and more content played, which leads to more fun. As you play more, and varied, content, you get more experience doing different things besides xp grinding, and you get better at the game. You're an FFXI player, you know as well as I do that XP parties have a different skillset than NMs, so more grind doesn't make you better at that after you learn the basics.
I'll say it again, I had my best times in FFXI when no one in the group was concerned about the death penalty. We took more risks, got less upset at each other for failing, and became better players because of it while enjoying ourselves more. The game was better off when it started deprecating the effects of the death penalty, and this game is better for having such a lenient one. It makes me more willing to help people, to experiment with different builds to find what works best, and to take on difficult content.
Lastly, please don't use the "lazy stupid easy mode" etc catchphrase. I don't mean to personally insult you, but that is like Godwin's Law for game forums: it means the debate is over because the person saying it has no real argument. I'm not "lazy and stupid" for not wanting to spend hours on a meaningless grind every time I want to experience the actual fun part of the game. I've got a job and responsibilities, I have limited time to spend on leisure and I want to make sure I'm enjoying myself when I play a game I'm paying a monthly fee for. It's far from impossible to have a challenging game without forcing players with limited time to spend most of it grinding. Heck, single player games manage it all the time. FFXIII was actually the hardest FF game I've ever played (and I've played all the mainline series and a good amount of the spinoffs) and it had almost no penalty for death, but because a wipe meant I didn't have to waste a lot of time getting back to where I was, I was more willing to put up with it and experiment until i found the right strategy.
tl:dr DP doesn't make players better at the game, actually playing the game does. I have to include these little summaries cuz I have doubts anyone reads my essay-length posts--I am rarely on forums precisely because I take so much time in writing responses, and that's time I'd rather be playing games, but I thought I should comment on this.