I started thinking about these when I read through Peter Woodworth's post on finite and infinite character death, then cross referenced it to the way heroes are taken out of a campaign in the miniatures game "Confrontation".
Basically, Peter's post posits that there are two extremes, those in which characters live only once and when they are taken out of action in conflict they are never seen again, and those in which characters may return time and again. Between these extremes, thee are games where characters have a finite number of lives, that may be known or unknown.
I can't find it in the rule booklets I've just searched through on my shelves, but I remember heroic "characters" in Confrontation being blessed by the gods, and when they die they have to justify their reasons to go back into the world. The more times they've died, the harder it is to come back. I vaguely remember the game mechanism being a roll of 2d6, and as long as the total was higher than the number of times this character had died so far they could return to play in the next game.
I could see the same thing working just as easily in a LARP set up, but using cards instead of dice.
At early stages in a characters career, they'd be inclined to take risks because even if they suffered grievous injuries, they would have a good chance of coming back (after injuries had healed of course). After a few times taken to the brink of death, characters would have to be a bit more careful if they wanted to survive in the long term.
With this in mind, the game needs to consider what "death" or being "taken out of action in conflict" means. If four wounds take someone down, is it the fifth deliberate "killing blow" that completely eliminates them? A character can obviously heal slowly from being wounded three times (and can heal the limb wounds taken during battle), but can they gradually recover from four blows? At what point do they need medical attention, and at what point do they need intervention from the gods or spirits of the setting? Is it a low fantasy gritty setting where a single wound might become septic and gradually get worse unless it receives medical attention?
Time to start honing in on the setting as it relates to the specific mechanisms of play.
This is intended to be escapism. We're not portraying comedies of errors and people who's lives are worse off than our own, we're after heroic tales of derring do...showdowns in the beach at sunset...slowing your fall from the crossbeams by sliding a dagger through the mainsail...precision shots into an enemies eye from 100 paces. That's why we don't want death to be too much of an obstacle (at least not at first); it should be a risk for the young, a threat to the old. Those who've been around a while need to step back into the shadows as manipulators to reach their goals of true power, but those who are young will probably need to take risks before they can do so.
We also need to consider the notion of deliberate killing blows and what they mean in the game. For accidental death, or death from bandits who loot the body then run away to avoid capture, the random chance of character revival is great. But in a one-on-one conflict, in an arena, watched by hundreds, where the arena's master declares that a killing blow must be administered to the loser...that's a different story. Especially if the loser has their head removed to go on a pike at the arena's entrance.
I'm thinking that the best solution is simply to call all times when a character is taken down, a "near death experience". Characters in the midst of such an experience may be permanently removed from play by a "killing blow"; otherwise they take a random chance at coming back uninjured, or coming back with some kind of permanent wound.
There's an idea...permanent wounds.
Since I'm looking at this game as a reflection of miniature battlegame campaigns, perhaps something akin to the permanent injuries in "Mordheim". Maybe you draw a card and compare colours and numbers...if it's red you potentially get off without an injury (as long as the result is higher than the number of injuries sustained so far)...if it's black you potentially get off without permanent death (if the result is equal to or lower than the current number of injuries you die, if it's higher you get a new injury).
These injuries might apply permanent impediments based on where they were sustained, or some other factor. Whatever is easy...or maybe they just count for tracking the likelihood of continually coming back.