You tossed up the idea (again) for hardcore mode, but that was it. You need to elaborate more on that. Hardocre mode can mean a few things. Money loss? XP loss? Gear loss? etc.

Also, bear in mind, with such heavy penalties, instances would have to be toned down and would be more boring. Take the Archimonde fight for example. It has an average of 80 wipes before downing for the first time. You would not be able to have a fight like this with XP/gear loss on death.

There are reasons why WoW are more popular than other games. Lack of "hardcore mode" is one of them.