Out of what was mentioned above, I like the debuff and money penalty.
As of item loss, I believe a feature could be added to protect a limited amount of items you are carrying. Say a certain stone you find could be applied to certain items to protect them from loss. It sounds a bit better than just keeping certain items, and would add a new item to the game.
Another idea I’ve been thinking over is having a portal to a locker/storage, which you could activate practically anywhere. If you die with valuables, it would be partially your fault for not storing them.
**Final idea (and my favorite) is that when you die a monster comes and seizes the dropped items. You would have to defeat the monster to retrieve your items. The more valuable the items and the higher your level, the stronger your monster. If someone else were to kill this monster for you it would restore the items back to you and *possibly* give a small benefit to your rescuer.
