Consequences can be hard to swallow, especially when it comes to xp loss. That said, the fear of loss is a very real thing that characters should be aware of. Many things that the paragons of the server have done would have been cheapened if there wasn't a possibility of loss. Is it heroic to fight against demons or undead if failure doesn't effect your character at all?
Losing xp is rough, but xp or character level alone shouldn't define your character.
Removing an aspect of consequence in the game ultimately robs everyone of the feeling of accomplishment one might glean from taking risks.
Player cleric raises should be cheaper though, I agree. That seems perfectly ic and makes clerics feel more like divine patrons than anything else.
I've seen plenty of servers with much less harsh Respawn systems make death meaningful and impactful. If you can't do it without robbing someone of two months of work and RP, then well, there is something wrong with the system. It's as I said, bad game design that is catered to an /extrmel niche/ market on NWN. It is not something that is going to cause players to fluctuate to the server, it is more likely, to turn them away.
"Well who cares if they leave. Then this place isn't meant for them." You say, that's you forcing your own opinion on others, and that line of thinking leads to a server population in small numbers where DM's may out number actual players. Unfortunately as pointed out before, mechanical power has a direct translation to narrative power in many cases. People can try to fight it, gang up on someone, but there's always a chance DMs will say "No." to it happening, so you're eternally caught in a catch-22 where you and others may want to do something, but can't.