Maybe it wasn't considered a flaw when it was made, but it's definitely a flaw. Horror games are scariest when you're deeply immersed, but nothing breaks immersion like dying unexpectedly. The art of horror games is creating a game where the player is always afraid they'll die, not one where they always actually do die.
It depends how death is handled. I mean some of the horror games I listed have only ONE section where it is even possible to die and others had constant death.
For the most part the "deaths" in Alone in the Dark are well handled (except for... a lot of them...) and make the mansion come alive with the sheer horror and futility of your situation.
The reason I consider the loss of really death filled horror games isn't because I consider "never dying" to be supperior (afterall there is no death in 7th Guest) or "Tons of Death" to be supperior... but rather that the "art of death" has been lost in an age where people can't handle a loss or two.
It's not scary to die
Ohh dear goodness I disagree. Anyone who died to the Bones or the Boogyman in KQ7 can attest to that (It is interesting. Ooga Booga shouldn't be scary but it somehow is). The major reason why death tends not to be "scary" is just that it tends to be final and thus releases a lot of emotion. A good game designer however can allow a game to remain scary even after a death sequence... In fact it can be just what it takes to shake someone out of their false sense of security without going all out like Amnesia does (for example if it wanted to be subtle. Which Amnesia doesn't do, Amnesia goes pop scare horror from the second you enter the game. Phantasmagoria on the otherhand, considered mediocre but I consider it underrated, spends large swaths of the game using nothing but subtly).
Thus its "flaw" is only so much in the fact that death is only included in modern games as an outcome but never really planned AND that modern audiances are less patient with videogames and reject any sort of barrier to their enjoyment including the game itself.
Some of the cheapest deaths in Alone in the Dark really did contribute more to the game then if they just allowed you to survive them by throwing boxes. MIND you... I am not saying Alone in the Dark didn't have really dumb deaths that are stupid and I don't like them... It is just that you were meant to play anyhow even if you died.
In conclusion: it is more alternate types of play and how to handle horror then genuin fault.