Fairness shouldn't entail choosing a less-capable race when you start, in the hopes of later dying and reincarnating yourself to bypass racial limits. It wouldn't be fair to anyone else at the table, who managed to stay alive. It's not fair to other Halflings if the only ones capable of reaching Dexterity 22 are Halflings who weren't born as Halflings, and who have died. I mean, just as a baseline, in fairness to all players everywhere, no rule should ever reward death.
It's an ad hoc situation, so we're left looking at how the rules work in other situations, and most things are about what we would expect. One rule that's pretty much universal, though, is that you can't exceed 20 through any means available to the players - it takes extremely powerful magic items, or you have to be a level 20 barbarian. An ad hoc rule which failed to conform with that guideline would seem inappropriate to me.
Lol. We have very different ways of viewing this, and, frankly, I am ok with this. That said, I would imagine that the occurrence of these particular situations would be rare in the extreme, as, most players I would imagine pick races to maximize their stats in any case. And. Why not? Death is just one more aspect of a characters story, personally, "rewarding death" to me sounds like we are somehow grading player performance, which is so far outside my interest, that I lack a real response in regards to that particular line of conversation. All of this is of course besides the point, really, as it sounds like we have very different playstyles.