Turning world options into a game sound like a great idea... taking it one level further (possibly not possible) but would be to make these kinds of settings character specific in some way. And giving characters perks for making things harder. Probably a horrible idea to implement but might be fun.
I would also like to add the Dark Soul's option into the pot. Basically when you die you drop your items like normal. however, they won't have any kind of timer so you can take as long as you like to go and get them, but if you die again they are gone.