Ok, so here's another quick rant of mine. The penalty of death isn't as fun as it could be. You might be thinking "No shit? Losing 1/3 of your total exp isn't fun enough for you Vendy?", but hear me out. Understandably the penalty is to keep players from acting... stupid. Without a penalty for death it's hard to get players to roleplay risks realistically, because they simply don't feel like risks anymore.
Let me show you where the roleplay stops though...
Idiot 1: "Hey want to go fight an illithid necromancer about to summon his legion of doom, though reportedly has not done so yet?" Idiot 2: "Hell no! That's suicide!" Idiot 1: "Ok, how about a legion of doom which came from an unknown source and is about to invade the city. If we do or don't it doesn't really matter though. They're going to blow up some stairs to stop them anyway and if we take to long it'll all come down on our heads." Idiot 2: "See, now you're being a bit more reasonable."
Instead they choose gnolls though. The well balanced threat/reward quest. After gathering a party of 6 lvl 6 characters this is what happens...
The whole party, having done this quest before and knowing how easy it is with a simple Circle vs Evil to start it off go charging into the dungeon. Nobody needs to stop and discuss the mission as they've all done it a hundred times before. 2 or 3 tanks a healer a rogue and maybe some party padding such as a mage or another rogue will get the job done without a hitch 90% of the time. This time it goes bad though. Priest forgets the mind wards we'll say.
5 minutes into the quest, all but 1 of the tanks fail a save (from the spell usually cast by the gnolls) and a veteran gets past the line to kill off a rogue while the mage throws up a quick invisibility to save himself rather than attempting a spell which could have saved the rogue. Mage be damned if he'd suffer an exp penalty for someone else's ass.
Rogue's pissed, but he get's up and dusts himself off and figures L5 isn't so horrible. All players gracefully spend 2 seconds typing out a quick "Look he breathes" then they shrug and head in further. They reach the room wherein many players often die if they're in a hurry. You know the one with the long bridge with all of the *spoiler threats* and the many gnoll *spoiler profession* off to the *spoiler direction*. In this room one of the tanks charge in while the others stand back yelling "No! Don't!".
Tank dies. Perhaps the healer dies also simply from getting spotted as he took 2 steps out to help. They both drop to L5 then stand up again after the dusts settles. The party marches on slightly demoralized, but still determined that after 3 deaths, they are going to get that stupid reward. 3 people go home upset, and 3 people (including the mage who was sucking down invisibility potions everytime things got remotely sticky) go home feeling confidant thinking "Wow, I must have done something right if I didn't die."
Let's spice the story up a bit by making it so that players cannot respawn in quest areas! Now when the rogue dies, the players are short handed and begin to rethink their strategy. A death to one is a blow to the whole party. The mage who let him die, now has a slight feeling of guilt because not only is the rogue out of the end reward, but the whole party will suffer from chests not being opened at the end. Still being slightly careless though the tank charges into the room of inevitable death. The priest follows him and they both die. Quest is over. No accomplishments for the party which refused to discuss their strategy. The rogue, tank and healer are required to wait until they are outside the quest area to make their "miraculous recoveries".
2 -huge- differences in this. First everyone has to lookout for themselves as well as the others, because if your party dies, your chances of survival get that much smaller. Talking and figuring out one anothers strengths and weaknesses is vital. As well as designing careful plans of action and contingencies. Nobody wants to let someone die (unless they have another agenda).
Second is that death might then not have to have such an extreme exp penalty. Players are out of the quest exp reward, out of any future exp for killing the baddies along the way and are forced to sit in the fugue plane until they either respawn at a safe location or wait for the quest to end. They may or may not also be out of the end cash and prizes as well if they opt to go for the safe respawn (which should be scripted to fail the quest in their journal at that point and players would be encouraged to RP as though the character had in fact managed to survive, but opted to make a run for it and default the job.) By spreading the penalty for a death across the party by making a death to one be a loss for all. The exp hit for a single character,such as the rogue betrayed by the mage, might not to be so hefty to encourage players to think with their heads and not their trigger happy left finger.
I know this hasn't a chance in hell of being implemented as the current system is so widely accepted already, but I offer the idea as a suggestion anyway if not simply food for thought.