I admit that the life thing isn't really the best solution, however I don't think we had time to look at that issue then and now it's what it is.The best solution would be to ask the dead player if he wants to buy a life (at a greater cost than standard) and then respawn, or he can just wait until someone finds a life.In local, there should have been a much greater respawn timer from death than it is (the time now is the death animation I think), dying in a local coop is a frustrating thing, cause the confusion when the camera just snaps can kill the player again and also the already living player...
Also, in regards to the ideas of making 0 lives respawn possible, I like the idea of being able to buy a life at a higher cost. Or you could even have the cost start higher than normal, and slowly tick down by one gold every second. So the longer the player waits the cheaper it is for them to come back. This would allow players with low gold amounts the ability to re-spawn after a while too.
I like the idea of having the price go down per-second. Additionally, for those who are a bit impatient, maybe make it tick more than 1 gold per second while you're lower level, and have it scale as you level up. i.e. 1 per second at level 5, 1 per 2 seconds at level 10, etc.