I'll just pass on the spoon tossing, and answer the "How do you handle IC 'normal' death (can come back to life), and permanent death (your character can not come back)?"
Normal death... if it can be called that, I play exactly as you see it in the game. I'll explain a bit later in this post.
My character Grunn plays by these rules, and has died many times, including being killed by an Octarch's guard once. He just rolls his shoulders and shugs it off. The death, that is, not the killing, as a reckoning is coming for that guard.
Permanent death. Otherwise known to me as the way of the Sheeples. If my character dies, they do not come back to life in the DR. They just vanish. And yes, I do this with a character delete. Applaud me Jeraphon, applaud me. I base these actions on this part of the Settings:
As you can see, it's difficult for a farm worker to collect enough money for good equipment like swords, armor, etc. to venture into the Stone Labyrinths. Nevertheless, some try to save every Tria they can to pass on to their sons so that the son may search for a better life, which often sends them into trouble. This "killing-by-kindness" is one of the reasons that city is never overpopulated.
Which actually completely conflicts with the new books and stories being told. But that is besides the point now.
Truth be told, the explanation for the DR and death has changed several times in the three-ish years that I have been here. Originally, I do not know what the plan was. When I first arrived, it was written straight out that your body DOES NOT go to the DR, only your spirit did. Your body remained behind, protected by an impenetrable shield until your spirit escaped the DR to rejoin it. It was also clearly stated that the chances of a spirit returning were quit rare. As such, the Dr was considered a place of great mystery that few knew about. I found this to be a hack-job of a story and reason, to tell the truth, and did not understand how Talad ever thought he could pull it off in the game. Likely the reason why it was changed once the DR was actually created. Which brings us to the second incarnation I witnessed.
In this version, the body did, in fact vanish. But, there was still great confusion among the players whether the body appeared in the DR, or it was just your spirit, and your body waited -somewhere- for you to exit the DR portal and rejoin it. All documentation on the previous idea for the DR vanished at this point, hence the confusion between new and old players. I actually liked the idea of your spirit being separated from your body, and your lost soul had to try to find it. Failure (by the choice of the player) meant permanent death. I also envisioned that your now dead corpse would appear somewhere in the living world, perhaps at the point you died, and would be disposed of. A very roleplayable situation, and good story to boot. It was still told that very few people returned from the DR to tell about it, and it was still a place of great fear.
This is the version I, and many other players at the time RPed by. Death was not something to be taken trivially. Several of my characters did die, and have been deleted.
Then came the next incarnation. Naturally enough, players started to believe that when your character died, they went to the DR, body, spirit, items and all. Then, they just had to take a jaunt over to the portal to become alive again. It was also said that death was not a big issue, and most people had the ability to come back to life. This also seemed to be the accepted 'new' way of it in the circle of Devs. It was told that people had just recently started coming back to life, so death was still feared. It was also said characters should come back feeling that they had yet some unknown purpose to fulfill. I can say I did not like this turn of events at all, teleporting all items with the body. It just seemed to be rationalizing the current mechanics of the game without a strong story to back it up. The one saving grace was the ‘purpose’ your character was meant to feel.
Finally, what we have been told now. Something, or someone is protecting the citizens of this world, either for a reason, or though pity. You die, you wander a bit, you come back. The DR is a world just as real as the 'live' world, and you come back to life -there-, not upon re-entering the live world through a portal. The portal is just a door back, not a rebirth. Perhaps it could be said you never die at all, but are instantly teleported into a newly recreated body in the DR… With your newly recreated items as well? Or does some hidden intelligence move your items though the planes of existence to place them with you, and dress your new body up like it was a doll? Something just does not add up here.
We are also now told that coming back to life was always common, always known about, and even -played- with in olden days (and still is now), conflicting with -every- version that came before it. This is where much of the disappointment comes from in older players, who were always lead to believe that the DR was to be something different, not just another land prettied up with darker textures and art. Not only that, but the unplayable idea of time flowing differently in the DR was introduced. Listen, folks have a hard time keeping the odd time of PS straight without adding a second flow of time in the DR that can not even be RPed correctly, as the characters move at exactly the same rate, and the passage of time does not really change. Five minutes is five minutes.
These are the Settings that Grunn RPs by. In other words, die, run through the DR as fast as you can, and basically forget you were ever there. All in all (sorry Xillix, my friend),I see the entire thing as contrived, shallow, and tending to take the easy way out by further rationalizing current game mechanics. Not the writing, as that is very good, but the story and feel behind it. I get the distinct feel of “Death is meaningless. Live with it.” There are many other problems I see with it that can not be easily resolved, such as the legal system and what really does happen to... *sighs* Nevermind. too much to go into, and all problematic.
I am not saying this to insult Xillix or the writers behind the current story. He is a good friend of mine, and knows I am blunt, to the point, very vocal, and somewhat tactless when I dislike something. But, he is still the same guy I remember as a noob causing trouble in the game, trying so hard for folks to accept what he was doing. He also still gets mad when they do not. Party on, Xillix.

How will I RP death now with the 'new' Settings? I don't know. Perhaps I just won't let my character get into situations where they die anymore, and await the next verson of the Death Realm to appear. That, and I will contiue to Haunt it.