Lets face it, we are going to re-load and refight the baddies that just killed us so why not let us do what the followers do and drop agro meaning the said baddies ignore us till we 'life up' again and continue the fight.
We could also allow the baddies to 'life up' during that period to to make it fair on the poor NPC whipping sticks!

If you die you respawn in a town and have to run to your Body naked 