I think its not so much user-hated as difference of taste. I love the perma-death aspect of a lot of the games I've played because I get to appreciate all I've earned. That being said, to balance it our, you remove the idea of 'epic loot' (things that take months to earn). Now, the hit of death isn't game-ending.

Games like Realm of the Mad God, DayZ, and Minecraft (its survival based multiplayer) make this perma-death a part of the game (though Minecraft, you keep the character). You feel defeated, but not dissuaded towards playing.

The way to keep newbies is to make the gear they can earn secondary to the gameplay.