death is bad enough
I would still just use the house rule suggested in this thread for raising from the dead. I.e., characters get a negative level that has to be worked off with xp, but they don't actually lose a level. Presumably, you have to spend 1000xp times current level to reduce a negative level. If you have two negative levels, 1000xp times (current level -1) for the first negative level. Etc. In the long run, characters with negative levels will be a little lower level than their companions, but it isn't nearly as traumatic for the player (not to mention book-keeping and other silly effects, like sorcerers forgetting how to cast certain spells).
I would still just use the house rule suggested in this thread for raising from the dead. I.e., characters get a negative level that has to be worked off with xp, but they don't actually lose a level. Presumably, you have to spend 1000xp times current level to reduce a negative level. If you have two negative levels, 1000xp times (current level -1) for the first negative level. Etc. In the long run, characters with negative levels will be a little lower level than their companions, but it isn't nearly as traumatic for the player (not to mention book-keeping and other silly effects, like sorcerers forgetting how to cast certain spells).