Hmm...
Well, just make it so stats don't matter as much as skill. That way, none of the power gamers will really complain.
Also, make a death countdown only for thing like wounds and poisons. After all, who's going to survive being cut in half?
Lots of people. Magicians' assistants. Planarians. Terminators.
Well, it's a fun and interesting thought, but it does add a problem -- when stupid players come in, they'll throw away their characters.
This means that a good player who wanted to use that character will now be short a potential character.
The other problem is that there'll always be a limit to the number of characters you can make that way.
In a game unlike that, you can arbitrarily create as many characters as you want and then explain their origins. In a game like your idea, you have to explain their origins first, putting a damper on how many characters you can make.
It would still be an interesting idea to consider, though!