This would deter people from mindlessly rushing other people and increase the value of each unit to the player. Certain other society types might find such deaths a positive. Real life adds complications. Like lynch mobs showing up at your government mansion. Morale should decrease the further away your units are from a friendly base, and it should decrease as casualties are taken.
Martyrs die to defend their homes and rally the rest of the population into a killing frenzy.
But if the populus doesn't agree with the war you get hippies. I don't think inot distance should lower morale. But casualties and the length of time away from home should. We will be showing the current version of it at E3, however. But we appreciate your interest, and would love to have your comments on our discussions about what makes a persistant real time strategy game fun.