Jim Hague said:*Verisimillitude: The Midnight setting is dark, it's grim, it's gritty. Death is everywhere, and worse still, death is not the end - the dead can rise as undead horrors to plague the living. Removing the possibility of death removes a major setting element.
Removing the possibility of death OOC does not remove death IC. It just makes the game more Dramatist and less Simulationist. I think Midnight as a hardcore Simulationist game setting sucks, anyway, and the D&D rules are a poor choice for simulationist play.
There's also the Gamist argument, that removing PC death reduces the challenge for the players. I think there is some truth in this - in D&D the primary default challenge is Not Dying - but this can be replaced by other challenges, like saving the NPCs and defeating the bad guys. Even retaining hope in a hopeless world can be a Gamist challenge in Midnight.
Fundamentally though I think the Midnight setting is best used for a primarily Dramatist game, with emphasis on character & story, the gripping narrative that arbitrary PC death ultimately makes impossible.