I think that it could work like the hardcore mode choice in Diablo 2. If you choose to be on hardcore, once your city is completely destroyed, you have to start over. Now you can have both of them on one server if Reverie wanted to. It would just be a choice. Now this might lead to some problems, but maybe not, at least if you couldn't tell if someone else chose hardcore or not. Otherwise people might decide to specifically prey on hardcore players and destroy their city while never being able to lose their own.
Picture made by Aametherar the orc (Elves are the best!)