Your point about lower-level replacements voiding the adventure speaks to an issue I have with 3e/4e - the math is too fine-tuned. In 1e/2e you could chuck a 3rd-level character in with a party of 6ths and it'd have a chance of surviving long enough to catch up a bit. Not so much these days...
I usually have replacements come in a level or so below the party average, but I put a floor on it to prevent too much backsliding.
Lanefan
In 4e, being 2-3 levels lower is a disadvantage, but HP will still be close, and attack bonuses will be off by 2-3 points. Powers will do a similar amount of damage, but the low level character will have fewer of them.
In older editions, being level 3 instead of 6 will mean about half the hit points, in addition to having lower attacks and saves (as above). That is a huge difference, especially because monster damage rises. The effectiveness of spells rises dramatically in older editions as well.
In any case, this comes down to preferred play style, like so many of these discussions. There isn't a best way.
For game mechanics, I would simply like to see clear guidelines for using SoD, not using SoD, and using something in the middle (like hp threshold or SSSoD).
As for dealing with character death, that can be dealt with in a couple of concrete, game mechanical ways, too.
Give character creation the possibility of being fast and easy if so desired.
Make combats shorter--I love all the things characters can do in 3e and 4e . . . but combat is so, so long. If a PC is taken out of a combat because of an early SoD (even paralysis), that player might need to wait 45 min to an hour to play again. Faster, but still interesting, combats would deal with a major SoD issue.