As far as realism goes, it would make the games more realistic..
but Nintendo/Gamefreak would be doomed.
They didn't avoid deaths in the games just to keep that 'E' rating.
Pokemon live forever, because if that level 99 Charizard just up and died 43 Exp. Points away from Level 100, it's trainer would be seriously POed. No one would buy the games anymore once they heard that their hard-trained Pokemon could die at any given moment. Sales would drop dramatically, and soon making the games would cost more money than they're worth.
If you really want your hard-trained Pokemon to die, use your imagination.
Release them, and pretend they died in some horrific battle, or of old age. I did that once.. released my level 50-something Flygon after his offspring hatched, and imagined he died. XD Then I regretted it later..