I did in my previous campaign, but only because the PCs had, in their previous life become integral parts of the city's life. Interestingly, of the two former PCs I used, both were formerly played by the same player. The first was a dwarf from the very first version of that campaign, several years before the new one started up. He eventually established a bar and became very wealthy, so in the "updated" version, he was a local figure in the business community and, later, an ally and election candidate. The other NPC was an elven monk of Lawful Evil alignment that the same player used in the early days of the new campaign; the player appeared less and less at sessions until one day he was gone, so I didn't so much take over suddenly as gradually - in any event, he remained an ally of the PCs but pursued his own agenda, eventually helping them by leading a private army against their enemies.
Though the "Next Generation" version of that campaign hasn't happened yet, in the official 'canon' history of the world the same character eventually became a fascist dictator of the PCs' home city, leading to the (aging) PCs causing his downfall.
Oh, I forgot one. Serulius started out as a Bard, then converted and became a Born-Again Cleric. His player eventually got given the official boot for disrupting my game (the only time I've ever kicked a player out), but his character became a recurring villain, and became more and more insane throughout until he eventually literally wore his undies on his head and got committed. The thing was, the way I played him as a total, complete lunatic was understated compared to the way he was originally portrayed by his player.
