1. Ok so the problem with what you're saying is that there doesn't need to be story specific reasoning for a gimmick server. You're wrong. I've already explained that if you want a normal Mabinogi experience, you play on the other 4 servers. This does not take away from that.
EDIT: Even then, is rebirthing really your character dying? When you die I would consider it a restart yet rebirthing would still be in that server so rebirthing isn't even affected. The game isn't even 100% lore accurate anymore. Read the Icebolt, Firebolt, and Lightning Bolt manuals. There's so much flavor text that doesn't apply.
2. Second problem is you think it takes years to progress. You're wrong again. I've already stated that I have a different opinion on what significant progress means so you saying a blanket statement like "It takes years" is absolutely wrong to anyone who disagrees with that.
3. The third paragraph you mention your feelings about how you think someone would just make the same character again. Mabinogi offers variety, it doesn't force it. If someone wants to be a boring person, they will have a boring time. If you want to do the same thing over and over repeatedly, maybe you'll have less fun in this type of server or situation.
4. Trying to make up an unlikely scenario where someone spends years playing on a permadeath server, knowing the consequences, and has no fun doing so is a huge waste of my time and yours. This is an idea that adds to Mabi. You not wanting an addition is just denying something that could be fun for someone else to keep things the same for no reason.
5. You mention the lag video. If that still happens, that's terrible, I'm sorry for those affected but it doesn't happen to me often if not at all in the east coast far away from the servers on average internet speeds and I want to believe I'm not the only one.
6. Rebalancing is irrelevant. You shouldn't be thinking of Phantasm when you start out a lv1 on a new server with no items. Not being able to do 10% of content that might be the hardest content in the game doesn't invalidate the other 90% of content that is accessible. As people progress in the server, who knows what could be accomplished. I'm not going to pretend I've ran Phantasm or the have done every bit of content in the game but that doesn't invalidate the suggestion for this kind of server.
7. Also I honestly don't care about gachas or potential Nexon's profits. If Nexon looks at my idea and says "cool! we'll do it", I trust there was someone on the team who balanced the pros and cons of implementing it. I'm not Nexon's accountant. You can think of some ideas to monetize it and contribute it to this thread but if it detracts from the heart of my idea I'll disagree with it.
And the big main point you and everyone that comments seems to forget is that even if they quit the permadeath server, they could just return to the normal server. It's meant to be a temporary stay, not for them to keep their character permanently. I would expect that everyone on that kind of server will die eventually and if they don't then it would be impressive.
-snipped to save space
Fire+Lighting: one big hit that chains like lightning bolt and knocks down everything it hits
Ice+Lightning: five weaker attacks that all chain and stun like lightning bolt
Fire+Ice: one big five-charge ice-enhanced firebolt, then a four-charge, then a three-charge, then a two-charge, then a single—basically 15 for the cost of 5
They all have their uses. It's situational.
Fire/Lightning I totally get. So when do you use the various ice fusions?