How much of a hassle is it to rebuild like that? I get that it can be cheap from a storytelling perspective to deus ex everything up and avoid player deaths, but I think I'd almost prefer a DM to do that then to go create a new character and all that.
Maybe that's just my play style though, I like to keep things casual more or less and I get connected to my characters. I could see a more 'hardcore' campaign needing to respect the sanctity of death.
Well, originally we were trying to get help to prevent the dead god from being resurrected so we had spent our time trying to drum up alliances and such with various nations. Lately we were realizing the dead god, despite being evil himself, was actually the god in charge of protecting the mortal realms from the Elder Gods, so now we might have to try to change our tactic (especially having lots some of our nation allies as well last night)... summoning him ourselves but trying to keep him on a short leash.
I was able to enslave a djinn and get his one free wish / year, and I was even willing to blow it to create a near-identical simulacrum of one of the dead players, but they seemed to adjust to the possibilities in making new people to run; I think some might have gotten bored with running the same character. I'm glad my lich didn't get wiped out, though; I'm attached to her, she has too big an ego and also runs her own cult with a hundred followers and is a hoot to play. She's already cast this whole tale as a heroic adventure centered on herself (yup, big ego), so it's rather fitting she's still around.
still, when it happened, we were all kind of surprised. We didn't even know an encounter was coming, let alone it would prove fatal; and I personally felt like it was rather unfair. I made a joke about how it's like thinking you're playing "Keep on the Borderlands" (the infamous beginner's dungeon in D&D) and realize too late you're actually in "Tomb of Horrors" with first level characters -- "Ooops, you stepped through that regular-looking door, turns out it was a sphere of annihilation, you are dead forever, what do the rest of your want to do next?"
The GM is actually one of those guys who doesn't get attached to his own characters, he has some of the coolest ones but it's typical for him to lose one or two during a typical campaign himself. I hate losing characters and typically don't.