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Using permadeath as a character reset

Damion over at Zen of Design combined (or saw his readers combine) two things that are rarely done in MMOs, and draw a lot of attention when they are done. Recently, permadeath has been brought up a few times (and implemented a few as well), and other games (most notably Shadowbane) have reset all character information in the game. And Damion asked if the two ideas complemented each other-- could permadeath make sure that, as with a character reset, everyone who gets too powerful is brought back to zero?

It would only work, however, if lower characters could somehow stop someone who was too powerful, and as Damion notes, permadeath usually lets people accumulate power, not lose it. If one character is able to gain enough power to break the game and you combine that with a permadeath system, then any deaths he or she causes bring everybody else back to zero. And the balance to keep the lower characters powerful enough to stop the higher character and yet not overpowered is so precarious that, as Damion says, it usually ruins the game.

But we are falling yet again into Damion's stages-- permadeath, it seems, just doesn't work unless you build your game around it, and then it can't necessarily be called permadeath anymore. The very fact of gaming means that, in a social game, to build a character worth playing, death, it seems, cannot stand in your way.