I love how MMO-savvy this is.
Anyone who has ever seriously raided has had times when they range-rez bodies out of the boss aggro field.
As for death penalty, no, you cannot lose level from dying.
However, exp death penalties do go past your level.
Meaning, you could actually end up with a lvl90 character with 0 exp if you died thousands of times.
For someone like that to levle to 91, he'd have to get enough exp points for 1-91. OUCH.