Just about every popular game has had or still has hackers. If I spend a year on a character, only to have him permanently killed by someone who created an account in 5 minutes and used hacks, I would put my foot through my monitor. And probably never play again. I've seen free to play games where entire clans would have one serious gaming account and another on standby for hacking/glitching, and these games didn't have perma-death.
Also, couldn't perma-death be avoided if someone disconnects when they realize that there's no way they are going to survive the fight? They could pretty much 4th Hokage out of the battle whenever things become too serious.
I think that some characters will eventually need to be killed off so that they can't go around permanently killing newer players, but not until they've reached the lvl cap or have gotten to a certain percentage within it.