I currently play at a private server that has it. Its very intresting and a very nice challange for those brave enough to accept said challange.
Rules:
• This decision is irreversible. Your bags, bank and mail items will be erased once you turn mortal.
• When your character dies, the game ends for you. If you choose to create and play a hardcore character, you do so at your own risk: we will not restore any deceased hardcore characters for any reason including connection problems, bugs, global warming, your little sister, or any other reason whatsoever.
• Dead characters will remain locked on a selection screen unavailable for playing. As long as you don’t delete them, characters above level 10 will be displayed on our scoreboard.
• You will be able to trade items and gold only with other Hardcore characters as long as the difference between your levels isn’t higher than 5.
• You will be able to group up only with other Hardcore characters as long as the difference between your levels isn’t higher than 5.
• Hardcore characters can not trade, nor buy on Auction House.
• Hardcore characters can use mail, but with no attachments.
Rewards
At max level you will be awarded with the title “Immortal”, unique tabard and a mount.
Yes, but what you describe is the Hardcore players playing with the regular one, and that is not very good.
Imagine you are a hardcore player, and a casual player decides to fight you. You kill him once, or twice, but he keeps respawning with all his gear, on the third time somehow manages to kill you, end you're dead, character deleted, etc.
It wouldn't be fair for the hardcore players to play with the casual ones, because the casual ones don't have anything to lose, and will keep coming.
It is fun, and I am up for a challenge like that, but on a separate realm where all players are hardcore.