There is a death penalty, they were discussing it being a durability loss. However unless its a big % lose and the gold for repairs is hard to earn and the cost/value could be worth a item of great value or something I don't consider 'durability' lose a penalty at all myself. losing exp and gold was a perfect death penalty to me. Perhaps it was a little radical past lvl ~95 but that could be fixed.
I'm curious if anyone knows if monsters regenerate hp while you are away like in wow or other games? I was curious if they were going to add some hp reset to mobs if you all die or something.