So, say you have a guild/group of people (around 30) together to take down a monster, you get it down to about 50% life and then you all wipe, everyone is sent to the death realm and has to get out, and leave that monster up to the next group of people who come along? you have wasted your prep time and your time fighting that monster, not to mention the time it takes just to get out of the death realm. also i imagine if there was a death realm after a while you would know how to get out pretty easily, so it becomes useless, if you do get sent to a death realm, it should just be until someone ressurects you
also, about losing items, its stupid, everyone is going to die at some point, should they have to lose all but three of their items because of it? no, and this would drive players away rather than bring them in