Since the only rule now is respawn, they can't really put the toothpaste back in the tube, so option 2 is the most realistic.

When I think about it, though, "dead is dead" should be the only option, because death as a concept is not only final, but unavoidable in the sense that it is always present as a possibility to anything that lives. To be able to turn it off and on like a switch, I think that takes something away from it.