It's not difficult to figure out who would emerge victorious. Yes, ideally some noble group would go out to fight them and end their tyranny. But not before dozens of frustrated players who thought they'd give the game a try just give up. Many of their new userbase quit the game, and the company began to lose revenue. They were soon forced, for business reasons, to curb the player killing.
Permanent death is a nice idea.
In an ideal gaming situation, it would even work. But when you have massive amounts of players all in the same gaming world, unless you have extremely strict regulating, it simply will not work. Because the bottom line is, people play games to have fun. And dying after you've put in a lot of time and effort, only to have to start all over because some punk wanted to ruin your day, is not fun. All rights reserved.