My opinion:
It should not be so damn easy to die. It seems to me that far too many new players go in this order. "How do I play?" "How do I get money?" "Where do I find a sword?" "Where do I kill things?" "How do I get out of this dark place?" in all of ten minutes to an hour. To solve this, if a player's health gets to 0%, or close to it, make them "mostly dead" with 0% mana inflicted. Start draining stamina, so they have a few minutes to crawl away and get someone to heal them. Once stamina is 0%, then you are "all dead", and there is only one thing for you to do...
Once 'all dead', your body and spirit are brought back to life in the Death Realm. However, I do not think all your stuff should go with you. Instead, your character would be 'cleansed' of all worldly items, and the items would either be stockpiled in one spot, or scattered around the realm in preselected repositories. Then, the more items you had upon death, the more looking around you have to do to get your items back. Note that no one could get your items but you. In this way, new people with few things would have an easier time getting out, while more experienced players would have to spend a bit of time looking for their Uber Sword of Doom and Platinum Armor of Ultraglow (TM). This would stop the five minute 'revenge' duels that happen all the time, as you would not have a weapon or armor if you ran right back out.
Exiting the Deathrealm would sacrifice any item you did not pick up. Quest items would stay with you when you where reborn in the DR, so they could not be lost.
Life shrines would be placed in each map, perhaps even more than one per map. Upon exiting the portal, you would find yourself in the closest shrine to the point of your death, getting rid of the ‘shortcut’ option.
Some sort of status effect should also be inflicted on a character exiting the DR. Not sure what, though. Weakness, sickness, mana drain, fear (can not fight), slow, aversion to light, or something more creative like Grime (your character looks and smells bad). Or, perhaps something random from a list. Death is like a box of chocolates…