1) Why games trivialise death and violence (I assume we mostly agree they do)
2) Whether this is specfic to games or just a reflection of our culture
3) Whether this is a good or bad thing i.e. does it affect us negatively
4) Can we ‘better’ present deat or replace it by a different game mechanic.

although I am sure we can each create our own subtly (or very) different versions.

At some point I will probably try to answer some of these, but at the moment I am not really sure where to start. For instance, we are tossing terms like ‘games’ and ‘players’ around as if we share a common understanding and they are, as groups, homogeneous.
If we start by considering the games themselves, many include little or no violence at all (puzzle games, sports games, rhythm games etc.). Games attempt to invoke immersion in different ways, with multiplayer shooters shutting down higher brain function via sensory overload and MMOs emphasising the social.
Speaking of MMO’s, people take (player) death very, very seriously there. You can get murdered (in real) for that sort of thing. Why? Because people invest so much in the game that they really do care.
And when it comes to people we play games for different reasons. Not everyone designs a (shooter) level to look like their school, complete with naked teachers and spends 8 hours a night chainsawing their genitals.

In short I believe there are unsettling games, just as there are unsettling films, but for the most part they reflect more about our culture than they contribute to it. I do feel that intellectually insubstantial games are over-represented in the market, but it is a market. If we keep buying crap, expect more to follow.

Part of the disconnect is the fact that a game model, on its own, has little to no emotional value. Making the player care about it is something that requires the narrative to show him why he should care – and most games don’t consider it worth it to do that for enemies. Even in the cases where they do try, it’s simply not possible to do that for every enemy and NPC in a game with a medium or large scope due to lack of resources. Finding a way to gain empathy procedurally through gameplay mechanics would help solve the resource problem, but a system of reward and punishment almost seems to be the antithesis of emotional engagement.

So, I don’t think the way games treat death is an accident. On the other hand, I don’t think it means all that much – film and books run into the same limitations, after all.

This. “Death” in games is just a condition under the rules of the game. The fact that it shares the same word as the deceased state of a living creature is almost irrelevant.

Funnily enough, that sort of crosses over into my “other” field.

I’m all for shifting language. It’s totally natural. But I don’t know if what you’re suggesting is really the case. That said, you’re right about “dying on stage”. Maybe if games were calling *any* failure “death” it might ring truer, but as it is, I just think it’s a shallow depiction. The only place I think your argument really applies is in deathmatch, where I completely agree.