FF6 "Choose your own Adventure" style

I may be able to think of more ways to incorporate dying as I go along, but it will probably affect the short term more than the long term.

As I mentioned before, you might take a cue from Radiant Historia, which allows you to go back to a preset point before the crucial choice in case of a "bad" ending. This would eliminate the worry of losing items/levels in case of a "wrong" choice. Dying in battle is one thing (and FF6 still lets you keep your xp), but I'd hate to have to redo hours of work after, say, Gau eats the world. (You can use that if you want.)