@Renall
You have a good point, but isn't it possible that permadeath influences people to let their characters live because they have an importance plot-wise? For example: Fin, on a FE4 second gen/FE5 setting. You know he's important to Leaf, and you know about his objective and how loyal he was to his father. Maybe seeing him guide his liege's son and help him, thus fulfilling his oath, would be a motive to let him stay alive for the duration of the game. All we need is to give him more plot importance and see how well he fares out so we can care about him.
It's hard to invest on a story where all the characters can die because they can't be plot important if they're dead already, I know it. But I still think they need more work on character development, even if it turns out as a wasted effort (for those who don't care about letting characters survive or isn't interested on them). Something that makes the characters have an impact on the plot, even if it's slightly. Something that gives them importance.