Oh boy, i always wanted a dark themed MMO with permadeath. What would be the point of burning a pagan if he would just respawn.
As i see it its perfectly possible to have permadeath MMO if:
1.Difference between low and highlevel characters isn't too dramatic. Imagine dwarf fortress where max skill is competent or accomplished. You obviously have the upper hand over dabbing character but if he has better equipped, has friends or more luck... The dabbing character won't be seen as somebody you just walk over when you decide, he has to be able to influence things around him from the start.
It has to bee balanced to a point you don't want to loose your character (to benefit from the permadeath mechanic influencing your actions) but if you do, you won 't quit cause of it.
2. It can't be grind based. If players see leveling as work, they don't want to see someone to destroying their work, they may get upset and quit.
I would do it like this: When you're online, you go on quest (preferably not scripted), socializing, explore... AND you make a list of task you character has to make when you go offline like train with weapon, craft this, build that, cut that tree... (or you would do it online by couple of clicks without any waiting and then you would go offline for timeperiod needed for your character to do this things)
While offline your character would be still in game, could be attacked but not killed, only knocked out. He would remain off all his possessions in his inventory but his properties like house could be destroyed and robbed, the character would of course deffend theirs property's. This would force the players to make villages together so the characters even if the players are offline would be a solid deffence to unorganized griefers which of course could be permanently killed, thus thinking twice to go against bunch of AI controlled character which have nothing to loose.
edit. I can imagine having dark themed mmo with childish grapics, it may get a strange disturbing feel to it like one in American Mcgee's alice. As i remember Notch (he worked some time on wurm if you didn't know) once said something like: "If you go for photorealistic graphics you need to devote lots of resources to it which can be spend elsewhere" ...i approve.