Not a "punishment" no... Just how it is intended to work... There has to be some excitement/fear/impulse to the game, if you take away these elements you take away part of the enjoyment (even if it doesn't immediately seem that way).
Sam
For me, being able to drop off my body in general is the excitement/fear/impulse you speak of, especially when on a squishy character I can be 1hitted with a high damage FlameField.
I do not however think I should risk smashing my stone to PK. That, imo, should purely remain smashable by PvE only as it was on Euro.
Currently actually this IS the case. But it's bugged. If you are to get hit by a mob then die immediately after to a player, it acts as if the mob got the kill.