In an ideal world, there would be a regular influx of new players. This may mean that even though many died there are still enough new players to make the island run, and those who died a long time ago are just barred from playing there.
Now, granted, we are not in an ideal world....
I don't think it would ever reach the point where the island wouldn't run. mortality isn't that high, for one thing, and once one side was weakened sufficiently, they'd lose the war naturally.
I'd just prefer to see a place where you have to actually deal with the real loss of certain chars. As it stands now, if I die I just come back as me again with less honor and so a smaller unit for a few weeks.
Hell, we even play our Ruler is Incarnate, so he dies, he comes back - we just make him ruler again, as a natural part of the RP. These aren't long-term players where there's an actual ripple of shock when someone dies
makes mortality a bit pointless, IMHO.