my idea is that when you die, you are brought back to live in the main town. the penalty is that you loose everything in your inventory that is not needed for quests. (so all equipment you are wearing, keys and potions will still be on you).
Then the death penalty is you are not able to leave town for 1 hour of being online. This would force people to get into their RP jobs, instead of going to battle again right away and get killed once again. that way people die less, and you would also do something with your chosen job, else some people will just choose a job, and then go off fighting/adventuring and never return to their job.
with this:
-people will actually do their job sometimes.
-no n00bs that keep going suicidal against monsters way to strong for them
-people wont lose too valuable items since those will be either in bank or equipt so these wont be lost.
-not a to big penalty for dying, since no money, exp loss, that strong item you had been working for several months wont be lost.
tought maby the penalty could be increased a bit bu losing some money, or 1/2/3/4 equiped items or so.