I think character deaths should happen occasionally. Not too often, but more than the "Characters duel to the death except not really" standard we have now. This includes characters with models, and I don't think those characters need to be "squatted" and rendered unplayable. If you look at WHFB, there were plenty of characters with models and rules who were dead at the "present" of the Old World. Heck, Azhag the Slaughterer got a big £50 metal model long after his canonical death, because he was a cool character with a great story that people would want to retell through games. Likewise, whilst his model was rather old by that point, I remember Gorthor the Beastlord getting a rather interesting WD article shortly after the Beastmen army book was released. And in the case of 40K of course, Erasmus Tycho was created and killed off BEFORE he got a model and rules! The "fictional historical" nature of the game means that long dead characters should still be represented in some form in the game, at least IMO, and killing off a character doesn't mean that they need to be retired from shelves and rules.
Honestly there's a few characters I'd like to die, not because I dislike them at all but because I think it would either A: make the storyline more interesting (the point about Calgar dying was a good one) and B: for axed characters unlikely to return, if they had a well written demise it would make for nice closure. Like, Wazdakka Gutsmek is sadly unlikely to return, but well written fluff where he goes out in a final blaze of glory would be a decent sendoff. As far as characters with models (though I would like a newer, more in scale one) I'd actually kinda like to see Huron Blackheart meet his end. Perhaps make a mini-campaign called "Turmoil in the Maelstrom" where the Red Corsairs and their many piratical allies fall upon each other in civil war (with new characters and a new model for Huron himself) and depending on the outcome Huron either finally runs out of luck, or alternatively emerges stronger than ever before.
But yeah, I wish GW would stop shying away from character deaths, and also get it into their heads that dead characters aren't unsellable. Sanguinius sold pretty well after all and his death is one of 40K's defining moments.
"Painting with this stuff is like trying to copy the Mona Lisa using Napalm." -DuskRaider on Typhus Corrosion.
"Begone foul demon Cotton Eyed Joe,
Thy grasp here faded a long time ago,
From whence did you come, there you shall go,
I seal thee away now, Cotton Eyed Joe."
The Legion of Vice- Emperor's Children and Friends!
(Formerly known as Squigsquasher)