"Any damage drugs do are usually temporary."

Bullshit. Addiction is permanent. After withdrawal symptoms have subsided, the hinger for drugs is still there and needs to be continuously controlled by the addict. Thus the insanely high reversion rate among past addicts (from what I have heard, ~95% in the US. From other sources: 50% in harsher countries like Singapore).

"Similarly, if you're selling drugs, you should only be selling to the people who want drugs. There's nothing immoral about selling to people who want them."

This is a classic Humean ought. I personally think that drugs are addictive and thus the normal rational impulses that limit uses of such products are ineffective here. Thus, if a drug is sufficiently addictive and does not have any other use, it should be banned. Thus, medical uses such as pain killers are fine (as long as the supply chain is secured). The use of the death penalty arises from the fact that drug use is notoriously difficult to limit and anything less would be largely ineffective. We cannot resolve this issue by discussion of facts etc... as these positions do not depend on fact. They depend on our inherent value systems.

"I just think that such solutions should be enticing people to do something better with their lives rather than punishing them for using."

Point 1: punishing an action is equivalent (empirically, not morally) to encouraging the opposite action.

Point 2: People have tried to talk people into not using drugs. Non-addicts think they can avoid addiction (which the lucky ones manage to do but quite a few don't). Addicts want to stop (at least the sane ones do) but can't due to the very nature of addiction.

I know the death penalty is extreme. However, in this case, it is one of the few things that will work (at least at significantly reducing the drug trade) and I think the human cost is worth the benefit of not having as many addicts.

EDIT 1: Found detailed data from the Singaporean govt. on recidivism rates from drug addicts. Short version: they have been improving and have gone from 81.4% in 1994 to 59.1% in 2000. Still extremely high. Details here: http://www.mha.gov.sg/basic_content.aspx?pageid=74. Scroll to the bottom.

EDIT 2: When we consider drug use in Singapore and China, we must account for their close proximity to the golden triangle -- one of the most active areas of drug production on the planet. Imagine that instead of having Mexico as a buffer against the drug trade (which is becoming reality all too quickly), we were instead right next to Colombia and friends and how much worse the drug problem would be then.

EDIT 3: Found sources for recidivism rates for US durg addict rehabilitation centers: Peterson KA, Swindle RW, Phibbs CS, et al: Determinants of readmission following inpatient substance abuse treatment: a national study of VA programs. Medical Care 32:535-550, 1994

(sorry for the firewall). Summary of results on recidivism rates: 25% within first 180 days. increasing to 35% in 1 yr.

Rates specifically for the VA program which may have significantly different characteristics from other programs. The 95% rate stated above seems a bit high compared to that. More research needed here.

EDIT 4: the Singapore recidivism rates are for 2 years so they are difficult to compare to.