Argh I was afraid something like that would happen!!
Obviously Morrus can't keep toggling ILR on and off...
I think that on a PW, ILR does have a place, specially when it's script-run (as opposed to having lots of DMs) and even moreso on a PW like PoA! Money is easy to get and without ILR, a low-level PC would get items no DM would ever think of giving him!
That said, is PoA intended to be played with ILR? I mean even the highest-level characters (Angcuru, Elendiel, etc) still get killed regularly, so maybe the module itself is difficult enough that it will balance itself out in the end?
If we can find some kind of script that checks ILR once the character is in play (instead of before connecting), like it does for our inventory (sending us to encumbria if we have over 130 items), then I say we can still use ILR.
If we can't, I think losing a character that way is too drastic and we should just forget about ILR.
If that happened to me with Kebur, I'm not sure what I would do...