Some interesting ideas, but from a company standpoint I'm not sure where this would go. You say that you want utter destruction as an option - I suspect that you expect to do more destroying and less being destroyed. That's fine, but if you're one of the destroyed and you don't like restarting, that's a lost player for the company.
I understand the desire to add "edge" by increasing failure penalties - I played Utopia for years, and Aegis for almost 2 years as well - but ultimately that will drive away a lot of interest. People talk about how awful WoW is for it's carebear approach, but it's blowing other MMOs out of the water and has had a longer run of high enrollment, as well. Fewer people want imminent death than want the ability to hold onto what they've created. From a corporate standpoint, carebear works - Blizzard makes the GDP of small nations on the (apparently correct) premise that more "carebear" sustains business better. Yes, that may be different if the idea of no monthly fees holds up, but thus far it seems to be the correct way of thought (e.g. Utopia's peak at 125k people or so, Tribal Wars' 225k or so, etc. vs WoW's 11 million). Remember that more people are willing to risk everything when the game is free; fewer people are willing to pay for a game that forces them to restart!
That said, from a hardcore standpoint, it doesn't. At this stage, DoF is such an unknown that it may not take off without some portion of the hardcore gaming population accepting it long enough to bring in casuals. The question becomes, how do you make it dangerous enough for the more hardcore gamers, but friendly enough not to drive off casuals? I suspect that permanent province death is not an option here.
The multiserver approach is the best to resolve this - a hardcore mode with province reset potential, and a more casual mode where a loss is an inconvenience but not a game-ruining experience for those that don't want to die. The only problem I see is maintaining an extra server adds cost for a game that has had some funding issues (iirc). This may be a plan down the road.
If multiserver, however, then reset provinces must remain on the hardcore server. You shouldn't be able to have two provinces on the same server (competitive advantage of trade, perfect coordination, etc.). Sure, roommates and RL friends can get close, but in my experience it's just a bit unfair. Beyond that, though, by starting on the hardcore server, you implicitly accept "grave consequence" upon death. If, first time you die, you jump ship to the other server, you're basically saying "I wanted to be able to grief others, but having it done to me is no fun!" I'm ok with that if you drop the hardcore province and have one on the relaxed server, but it seems cheap to do it in a way that gets you two provinces on the same server.
Anyway, that's my first-pass set of thoughts. I don't really have a good understanding of what Reverie wants, but I think from a business standpoint, you have to err on the side of casual rather than hardcore. Having both available would be nice, though.