La Couronne de Cuivre

The mechanism there ... in the base game, the Black Pits has a special override script for PCs (BPPLOT.BCS) that does the "fall asleep at 1 HP, wake when raised" part, and the non-removable "Slave Ring" with a min-HP effect and immunity to instant death (But only the opcode 55 "slay" kind, because that's the only kind that comes up in that adventure). Area scripts handle the "if everyone goes down, you lose" part.

This already has the potential to do some bad things. If you export a Black Pits character and import them to the main campaign, they'll keep the script and any equipment they have - including the "Slave Ring" if you did so before victory. Put that into a campaign that's not designed for it, and trouble ensues. Shoal's kiss on the protagonist is a soft-lock, for one - they go down, you can't raise them in the field because you don't have the levels, and you can't leave to reach a temple because of "You must gather your party before venturing forth". If you still have the ring, it's also impossible to kill that character for a proper Game Over, and your only recourse is to quit out.

So you can take that mechanism as inspiration, but it needs a lot of tweaks to actually function outside its original context.

Yes - point 1 is that the BP mechanism is designed for BP itself, and it operates at last in part by character and area scripts. Those character scripts are problematic outside the context of BP. My mod adjusts the mechanism to rely less on those scripts, since the intent is for BG characters with no such scripts to venture into and back out of BP. So the technique in the mod is a step toward generalizing the proposed “no real death unless TPK” mechanic.

Point 2: even with my mod though, the BP behavior still relies on other scripts, e.g. any party members who pseudo-died are “resurrected” via an area script when they return to the waiting area between fights. This would have to be generalized, as I say probably into BALDUR.bcs. But that would be touchy.

Point 3: if you get that right, there is still the question of how to protect everyone and make then subject to the pseudo-death mechanism. BP does this via undroppable rings, and my mod expands on their use for this purpose. But that fits the lore of being captured and sent to the fighting pits. You can’t use an equipment slot for this in a non-BP game. Very theoretically you could apply a permanent effect to all joinable NPCs’ .cre files, and to Charname via script in certain select starting areas. This, again, would be touchy. And the consequences of it going awry would be severe, as dying is one of the most fundamental game mechanics.

So, there is a path to get there from here. And what I’ve done might serve as a shortcut for one step on that path. But it would still be a major undertaking, for which I have neither time nor enthusiasm. (I really disliked the “take a knee” mechanic in NWN2 for example.)