Re. weapons and such: I've tinkered with Planeshift some, haven't played it a whole lot. However, they have magic in their game (since theirs is a fantasy MMORPG). They plan to have a deal where if you're inexperienced, the spell can backfire on you, damaging you or whatever. We could have something like that - if your skill level with a particular weapon is too low, you could injure yourself with it. Thus, we should have training booths, where you can pay to learn to use a weapon or other system without having to worry about killing yourself by launching a REAL mini-nuke grenade half an inch in front of you. It's all simulated, so no real chance of harm. However, simulation can only take you so far, so we should have both a hard ceiling on the amount of skill you can gain through training combined with a law of diminishing returns (i.e., harder to advance in skill through simulation). I'll post my views on experience and skills in the appropriate thread.
Cross-topic question, though: should we make skills weapon-specific, or have classes of weapons? I would advocate as wep-specific as possible, since two kinds of pistols won't always fire the same way.
Re. death: I would say a good possibility that I was thinking about putting in my game (and y'all are welcome to use now) is teleportation - everyone has a "personal emergency teleport device" or something. All it does is pull the person back to a friendly point. However, if this occurs, it just pulls you back - you leave all the stuff you're carrying there on the ground. This still allows for looting, without having the victim die.
Another possibility is cloning. If you're part of an organization (e.g., the Terrans or whoever), then you're automatically cloned and put back in, though for a cost (perhaps a standard tax or something). If you're independent (e.g., merc.), and die, then you have to pay someone to cloning you. Perhaps a black-market cloning / revival system? You could say that the cloned body, being manufactured, is weaker, and not all the information in one's brain can be transferred. So, this would explain why you lose levels / skills / money / stats when you are returned to the game.
Death is one aspect of MMORPGs that is difficult to figure out, mainly because permanent death, IMO, is not particularly an option, esp. if people are paying to play this game. (Seem to remember something on Gamasutra about this; I'll see if I can find it.) People won't want to invest money and a lot of time building up a character, only to have that investment be turned to bupkis when your idiot teammate (or, insert another term here) decides it'd be fun to try firing this new rocket launcher he found... except, he doesn't have the skill, so it blows up. And, of course, you're standing right next to him.
Take it easy,
Brian