This is Monster Hunter meets SAO / .Hack meets Time Splitters - indeed. That was kind of the idea @BadDo9 and I had, lol. Yes!
Some inspiration was taken from there, yes. Yes, all your characters know each other IRL. You are friends, and decided to get the game together.
Sorry, but that isn't in the game mechanics. A nice sword for you! Also, @Uriel1339 @lord-watchman @Casavay forgot this, adding into the OP now, feel free to make your character an Iron Man if you want. There would be missions that you can accept from a central hub to gain rewards and experience. The party would be allowed 3 deaths a mission/hunting trip before being kicked out and penalised with the fourth. Or you could make an Iron-Man character. Iron-Man characters gain more/better rewards, level faster, etc... but have permadeath, so one death and you lose that character.
As addendum to @BadDo9 note regards Iron-Man Mode. You do lose progress, but not all of it. Imagine after you had an Iron Man character and he dies, you get 'points' that you can re-invest into a new char. Imagine in generic MMOs, max. level being 99. You are level 50, iron-man mode. You die. Instant of starting at 1, you get enough points to make a new character to start a new one at like 25 to 35. So you lose a good chunk of process but not all. And obviously you still in this case got your IRL character, soooo you still can go and play on. That is kind of why @BadDo9 and I wanted the VMMORPG type, so even if characters die or new characters are made, the relationships remain
