The object here is not to make this pay to win, it is not to take away permanent death. It is to keep players in the game. Open up your friends list. Look down it. Ok... How many have you seen in the past week in a game that has been out four? How many will be there next week?
What we are trying to accomplish is a way to keep more players playing longer with a minimal amount of development. I have a buddy that built a level 20 army, but quit before he ever used it because it would be too hard to rebuild if lost and just went back to playing World of Battles.
I will give you a final reason, there are too many bugs at this stage for permanent death and too many players exploiting the 100% resist bug for that to be even remotely practical. If I lose a level 20 army to a player that can't be killed, I become a much unhappier camper.