"When people tell stories about their greatest moments, they often revolve around nearly dying. In games, what's really special for people is not, 'I killed the bad guy and I was perfect', it's, 'I nearly died, but I just managed to kill the bad guy.' How do we set out specifically to give them those experiences? That's a great challenge for us as game makers."
-- Brian Fleming, via The seduction secrets of video game designers
Guild Wars 2, with their downed, defeated, and rally mechanics, looks to be making a smart move. In contrast WoW's battle rezz (in various forms) seems to have missed the point - you are dead, a red smear on the landscape, and btw quite possibly by some mechanic that wiped out 50% of your health in one hit.
A little idea to toss into the mix - make damage and health work on a reverse logarithmic scale. The big nasty blows at the start of the fight when you're full of pep and bluster will knock 5%, 10% or more off your health, but the same blow when you're nearly dead only knocks off 1% or 2%. It might take 10 hits to get you down to 10%, then another 10 hits to get you down to 1%, and finally 10 more knock down drag 'em out hits to finally put you down. Down, but not defeated of course ;-)
It's all smoke an mirrors, but it'll work in the same way that players like having a 200% bonus for rested XP vs a 50% penalty for unrested XP.