MagicManICT has hit the biggest issue of permadeath. It is a noble concept to attempt to employ in a game except the creation and maintainence of a horde of alts diminishes a loss to some as a mere inconvenience. Alts or not as long as people will create ways to preserve their work and time investment.
A revamping of the combat or siege system may fix some issues but it does not solve the underlying problems of all that comes with permadeath. The second major issue is the belief system although a nice system has further unbalanced this situation by favoring combat much more greatly than peace and civilization.
As I mentioned before the systems in themselves are fine but they must be balanced to create equality to the choices.