I implemented permadeath for lords and companions on my mod. Actually it's just script to remove them from the party, prevent them being respawned again and update the troop note. The message on the battle when they're down still 'knocked down', not 'killed'.
Yes, implementing permadeath for lords can make the game run out lords. I made the chance for lords being killed about 5% (depend on their ironflesh skill and their luck), but still there are several lords 'killed' in the first month of game time. As Warband let us rename troops, we can reuse the troop id of death lords for new replacement lords, but as there's family relation slots on WB, we should re-initiate the slots for the new lords and death lords' family. Using death lord's troop Id for new lords also can produce issues on game log. Any log about what the death lords have done in the past, will be assigned to the new lords. So I choose not to respawn replacement lords.