I like doing challenges like these a lot. I always do stuff like this on single player games. I always played HC on diablo 2 and that was very exciting. I don't think wow would be as suitable for this than other games tho. I think wow is designed around too much of a lightweight death penalty and as a result things like potions are helpful, but not as much as they would be if the game was originally designed to be more challenging.
For example, limited invulnerability potions give you a small window of escape, but I imagine if wow was more challenging out of the box, then limited invulnerability potions would be more effective, harder and more costly to make, could be used more often, and not cause a cooldown on other potions.
I love challenging games though, but there aren't very many and I often intentionally gimp myself to create my own challenges.
I think it would be cool though if you got a group of people together all playing permadeath, with no twinking etc. That would be fun. You would really have to prepare for dungeons etc and everyone would be more cautious rather than facerolling a dungeon in 5 minutes.